TPs Friv Their Way With Form 2555 Exclusion

Post by **The Observer** » Wed Dec 12, 2012 4:57 pm

NORMAN DOUGLAS DIAMOND AND ZAIDA GOLEa?A DEL ROSARIO,
Plaintiffs,
v.
UNITED STATES,
Defendant.

Release Date: DECEMBER 11, 2012

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

(FILED: DECEMBER 11, 2012)

Taxation of U.S.-source income received by persons resident abroad;
failure to file a proper tax return requesting a refund; application
of I.R.C. section 7422(a)

Norman Douglas Diamond and Zaida Golea del Rosario, pro se, Ome City, Tokyo, Japan.

Michael Ronickher, Tax Division, United States Department of Justice, Washington, D.C., for defendant. With him on the briefs were Kathryn Keneally, Assistant Attorney General, Tax Division and David I. Pincus, Chief, Court of Federal Claims Section, Tax Division, United States Department of Justice, Washington, D.C.

OPINION AND ORDER

LETTOW, Judge.

In this case, plaintiffs Norman Douglas Diamond and Zaida Golea del Rosario request monetary relief in the form of a refund of income taxes for 2005 that were allegedly wrongfully withheld. Pending before the court is the government's motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Rules of the Court of Federal Claims ("RCFC").

BACKGROUND

Plaintiffs reside in Japan and paid income taxes in this country through withholding on income generated by investments in the United States during calendar year 2005. 1 They claim that they are owed $ 10,645.40 which was withheld during 2005 and was not refunded by the Internal Revenue Service ("IRS"). Compl. at 11. On June 4, 2006, they filed a joint tax return in the United States for the year 2005. Compl., unnumbered attach. at 21-35. Their tax return included IRS forms 1040 (U.S. Individual Income Tax Return), 6781 (Gains and Losses from Section 1256 Contracts and Straddles), and 1116 (Foreign Tax Credit). Id. They claimed a refund in the total amount of tax which had been withheld during the year.

Plaintiffs did not complete these forms in conventional fashion. In addition to the IRS forms, their return was accompanied by a statement from plaintiffs regarding discrepancies in the filing. First, plaintiffs did not include social security numbers or taxpayer identification numbers with their return, instead writing "see statement" in the provided blank space. Compl., unnumbered attach. at 21, 32-35. Second, on Form 1040, plaintiffs crossed out portions of the jurat above the signature line where the form reads "to the best of my knowledge and belief, [these statements] are true, accurate and complete," instead referring the reader to the attached statement for explanation. Id. at 22. 2 Third, on line 7 of Form 1040, plaintiffs entered a zero for "wages, salaries, tips, etc.," once again indicating that the statement could explain more fully. Id. at 22. Fourth, plaintiffs entered a sum of zero dollars on line 1 of form 1116 for "gross income from sources within [a foreign country]," writing that this amount was reached "after 2555 exclusion" and once again directing the reader to the statement. Id. at 28. Fifth, plaintiffs did not file an accompanying form 2555 regarding their foreign income. 3 Sixth, plaintiffs did not complete a TDF 90-22.1 (Report of Foreign Bank and Financial Accounts), which is a required filing for individuals with an interest in foreign financial accounts. See Def.'s Mot. to Dismiss at 4.

The attached statement detailed plaintiffs' reasons for the listed aberrations. Specifically, Mr. Diamond averred in this statement that because of the IRS's "former violations of the Privacy Act of 1974," he was "not aware of any social security numbers that [they could] safely use." Compl., unnumbered attach. at 32, paragraph 2. He explained that he did not sign the jurat as-is because some of the numbers contained in these forms were merely estimates, and that "errors [we]re nearly certain to be incorrect due to [Mr. Diamond's] inability to understand the instruction." Id. at 32. Mr. Diamond also stated that he refrained from filing form 2555 "n accordance with the 5th amendment to the United States [C]onstitution." Id. at 33, paragraph 5.

On September 15, 2006, the IRS wrote plaintiffs, stating that their tax return for 2005 would not be accepted and that it had been deemed frivolous. Compl., unnumbered attach. at 38-41. The IRS advised that it "[could ]not accept the Form 1040 [it] received from [plaintiffs] for the tax year 2005," because it did not contain information required by law. Id. at 41. The IRS did not specify what information plaintiffs were required to provide, but it did direct them to the IRS website for further guidance and gave instructions for future communication. This letter was received by plaintiffs in Japan on September 26, 2006. Id. at 42. The letter called for a corrected return within thirty days if plaintiffs wished to avoid being assessed a $ 500 penalty for a frivolous filing. Id. at 42. Plaintiffs failed to file a corrected return within that time period and were then assessed a penalty. The penalty is not at issue in this case. 4

Plaintiffs made efforts to discover what deficiencies afflicted their 2005 tax return. On September 27, 2006, Mr. Diamond responded to the IRS with a letter inquiring as to "what actions . . . might be possible in order to remedy" the insufficient return. Compl., unnumbered attach. at 42. On March 16, 2007, plaintiffs submitted Form 911 (Application for Taxpayer Assistance Order) requesting help from the IRS. Id. at 43-44. On March 22, 2007, Mr. Diamond wrote again to the IRS expressing confusion and requesting that IRS agents be sent to his home in Japan. Id. at 45-46. In February of 2010, Mr. Diamond spoke on the phone with IRS settlement officer Marilyn Richburg, who supposedly informed him that he must refile the 2005 tax returns with his new social security number. Pls.' Response to Def.'s Mot. to Dismiss ("Pls.' Opp'n") at 10, paragraph 68.

On October 4, 2010, plaintiffs refiled a return for 2005 seeking a refund. Def.'s Reply in Support of Mot. to Dismiss ("Def.'s Reply"), Ex. 3 ("Refiled 2005 Tax Return"). This filing consisted of forms 1040, 1116, and 6781 and cured some, but not all, of the defects of the first filing. Mr. Diamond provided his social security number, but Ms. del Rosario gave neither a social security number nor a taxpayer identification number in the space provided. Id. Plaintiffs once again declared $ 0.00 in foreign income on the 1116 form, writing in "[a]fter 2555 exclusion," but again did not provide form 2555. Id. They also did not provide a report of foreign bank and financial accounts. Plaintiffs did sign the forms without crossing out or altering any part of the jurat. Id.

On December 22, 2010, the government wrote to plaintiffs requesting additional materials to complete their federal income tax return for 2005. See Pls.' Reply in Support Of Objection to Mot. to Dismiss ("Pls.' Reply"), unnumbered attach. at 17. Specifically, the government requested forms W-2, 1042-S, 8805, 8288A, or other U.S. withholding documents to support the withholding of $ 10,645.40 reported on the refiled 1040. Id. at 17. Although documents detailing that withholding are before the court, see Compl., unnumbered attach. at 49-53 (broker's report of passive income and withholding), 53-56 (form 1042-S ("Foreign Person's U.S. Source Income Subject to Withholding")), nothing indicates that plaintiffs ever complied with this request.

On March 31, 2011, the government sent a letter to plaintiffs stating that it had once again disallowed the claim for a return of 2005 taxes, this time because the tax return had not been filed within three years of the tax coming due. Compl., unnumbered attach. at 58-61.

On June 5, 2012, plaintiffs filed suit in this court for the refund they claimed for 2005, and which they allege was improperly denied to them by the government.

On August 6, 2012, the government filed a motion to dismiss for lack of subject matter jurisdiction under RCFC 12(b)(1). The motion has now been fully briefed by the parties and is ready for disposition.

STANDARD FOR DECISION

When addressing a motion to dismiss for lack of subject matter jurisdiction, the court will "normally consider the facts alleged in the complaint to be true and correct." Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988) (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Air Prod. & Chems., Inc. v. Reichhold Chems., Inc., 755 F.2d 1559, 1562 n.4, (Fed. Cir. 1985)). However, the burden of establishing the court's jurisdiction resides with the party seeking to invoke it, McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936), and this burden is not satisfied until proven by a preponderance of the evidence, Reynolds, 846 F.2d at 748 (citing Zunamon v. Brown, 418 F.2d 883, 886 (8th Cir. 1969) (quoting McNutt, 298 U.S. at 189)); see also Jascourt v. United States, 207 Ct. Cl. 955 (1975) (stating that plaintiff bears burden of establishing waiver of sovereign immunity).

SUBJECT MATTER JURISDICTION

This court has jurisdiction over tax-refund suits under the Tucker Act, 28 U.S.C. section 1491(a)(1), but that jurisdiction is subject to requirements set out in the Internal Revenue Code ("I.R.C.") at 26 U.S.C. section 7422(a). See Dumont v. United States, 85 Fed. Cl. 425, 427-28 (2009), aff'd, 345 Fed. Appx. 586 (Fed. Cir. 2009). Under Section 7422, "[n]o suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax . . . 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." I.R.C. section 7422(a). Therefore, a plaintiff seeking to establish subject matter jurisdiction in this court for a tax refund claim must demonstrate that he or she has first filed that claim with the Secretary of the Treasury in accord with Section 7422. United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 7-8 (2008).

To constitute a valid claim for refund, a tax return must satisfy four criteria. "First, there must be sufficient data to calculate tax liability; second, the document must purport to be a return; third, there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and fourth, the taxpayer must execute the return by signing it under penalty of perjury." Beard v. Commissioner, 82 T.C. 766, 777 (1984), aff'd, 793 F.2d 139 (6th. Cir. 1986) (summarizing requirements for a valid return found in Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934), and Florsheim Bros. Drygoods Co. v. United States, 280 U.S. 453 (1930)). Plaintiffs have now twice filed returns for the taxable year 2005. Both returns must be judged by the Beard criteria.

A. The Original Return

The first tax return plaintiffs filed for 2005 was submitted in June 2006. Compl., unnumbered attach. at 21-35. While this return purported to be a tax return, satisfying the second prong of the Beard test, it failed the three remaining prongs.

The original tax return did not contain sufficient data to calculate tax liability. Neither plaintiff included a social security number or a taxpayer identification number, providing the IRS with no means of verifying their identities. Compl., unnumbered attach. at 21. Plaintiffs listed $ 0.00 in wage income and $ 0.00 foreign income and did not disclose their foreign bank and financial accounts. Id. at 22, 28. A properly executed return must contain a recital of income; without such essential information, the IRS cannot calculate the tax or refund owed upon the return. See United States v. Mosel, 738 F.2d 157, 158 (6th Cir. 1984) (holding that entering zeros in place of income constituted failure to include any information upon which tax could be calculated); Schlabach v. United States, 101 Fed. Cl. 678, 679, 683 (2011) (holding that a frivolous-tax-return penalty was properly assessed on a tax payee who showed a zero for gross income although he earned more than $ 16,000 in wages); Gregoline v. United States, 99 Fed. Cl. 161, 166 (2011) ("Tax returns that are filled out only with zeros do not contain sufficient financial information to be considered properly executed tax returns."). Although plaintiffs did include other sources of income such as investment income, the zeros entered for wage and foreign income rendered an accurate return impossible to figure. Plaintiffs noted on the forms that in fact they did have foreign income, but that "after 2555 exclusion," the resulting taxable amount was zero dollars. Compl., unnumbered attach. at 28. Because they did not attach form 2555, however, any such exclusion was not verifiable and the return incalculable.

Correlatively, the original tax return was not a reasonable attempt to satisfy the requirements of the tax law. When plaintiffs withheld information regarding wage and foreign income, they could not have reasonably believed that the requirements of filing a tax return had been fulfilled. United States v. Moore, 627 F.2d 830, 835 (7th Cir. 1980) ("t is not enough for a form to contain some income information; there must also be an honest and reasonable intent to supply the information required by the tax code. . . . [T]he government should not be forced to accept as a return a document which plainly is not intended to give the required information."). Plaintiffs' failure to provide information regarding wage and foreign source income was plainly unreasonable.

Additionally, the original return was not executed under penalty of perjury. When plaintiffs crossed out a portion of the jurat, they invalidated their return under the Beard test. Compl., unnumbered attach. at 22. Plaintiffs' substitution of a statement regarding the conditions under which they submitted the return did not cure the harm done by altering the jurat. See Watson v. Commissioner, 93 T.C.M. (CCH) 1332 (2007), aff'd, 277 Fed. Appx. 450 (5th Cir. 2008) (holding that alteration of the language of the jurat invalidates a return); see also Williams v. Commissioner, 114 T.C. 136, 140-41 (2000) (holding that either deleting text from the jurat or adding text to the jurat invalidates 1040 forms); Sloan v. Commissioner, 102 T.C. 137, 143 (1994) ("[A]lterations of portions of the jurat . . . invalidate an otherwise complete and accurate return.").

Because the original return fails three of the four Beard criteria, it cannot be considered a valid return and claim for a tax refund within the meaning of I.R.C. section 7422.

B. The Amended Return

The government has argued that plaintiffs' amended return was untimely under I.R.C. section 6511 and thus invalid because it was filed with the IRS more than three years after the tax was deemed paid. Def.'s Mot. to Dismiss at 6-8. 5 This argument is cast in jurisdictional terms. It ostensibly reflects the position taken by the IRS in its letter to plaintiffs of March 31, 2011, where the Service stated that the amended tax return could not be allowed because "you filed your original tax return more than 3 years after the due date." Compl., unnumbered attach. at 58-61 (Denial of 2011 Claim). The IRS's position was factually mistaken, however. The original return for 2005, however, was not submitted more than three years after June 15, 2006, the date it was due. That original return was submitted in June 2006, but was not accepted as a proper return because it was deficient.

Moreover, as a legal matter, the pertinent deadline for submitting a claim for refund to the IRS is either "3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later." See I.R.C. section 6511(a) (emphasis added). Because no proper return had yet been submitted, when plaintiffs filed their "amended" return in October 2010, that return would have been timely under the "whichever . . . expires the later" clause of Section 6511(a). The amended return would have been the first and only time that a tax return for 2005 had been filed. Consequently, it would have been timely under Section 6511(a), had it been a proper return. See Murdock v. United States, 103 Fed. Cl. 389, 394 (2012). 6

When plaintiffs filed their amended return in 2010, they cured some of the defects present in the original return and revised some of the figures. Mr. Diamond provided a social security number for himself, and Ms. del Rosario indicated that her application for a taxpayer identification number had been denied, while a request for a social security number was pending. Refiled 2005 Tax Return at 1, 11. The jurat of the 1040 form was signed by both plaintiffs without any alterations or additions. Id. at 2. However, the amended return still fails two of the four Beard criteria. The amended return does not provide sufficient information to calculate tax liability, nor does it represent a reasonable attempt to satisfy the requirements of tax law.

In the amended return, plaintiffs persisted in omitting any information regarding their wage or foreign income. As in the original return, plaintiffs indicated $ 0.00 in wage income, and $ 0.00 in foreign income "after 2555 exclusion." Refiled 2005 Tax Return at 1, 7. Both entries referred the reader to an attached statement similar to the one which accompanied the original return. Id. at 11. The statement simply cited to the Fifth Amendment as a rationale for not providing the required information. Id. As before, plaintiffs did not include form 2555, nor did they document the amount of foreign income or the rationale for excluding it from U.S. taxation in any other way. For the same reasons as those explained above, plaintiffs' omission of any information which would enable the IRS to verify their tax invalidates their amended return. Such omissions are just as unreasonable as they were in the original return.

Because the amended return does not provide sufficient information to calculate tax liability and is unreasonably deficient, the amended return fails the Beard test and cannot support jurisdiction in this court for a refund claim.

CONCLUSION

This court does not have subject matter jurisdiction over plaintiffs' claim for a refund of income taxes because plaintiffs have not filed a valid claim for refund with the IRS as required by 26 U.S. section 7422(a). For the reasons stated, the government's motion to dismiss is GRANTED. The clerk shall enter judgment in accord with this decision.

No costs.

It is so ORDERED.

Charles F. Lettow
Judge

FOOTNOTES:

/1/ Generally, U.S. payors of income not connected with U.S. businesses, such as dividends and royalties, are required to withhold tax at a flat 30 percent (or lower treaty) rate on non-wage income paid to nonresident aliens. See 26 U.S.C. section 871(a). U.S. citizens with foreign addresses may have tax withheld at this rate. If so, they may claim the tax withheld as a withholding credit on their tax return.

/2/ The unaltered full text of the 1040 form jurat reads: "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge." The 2005 version of this form may be located at www.irs.gov/pub/irs-prior/f1040-- 2005.pdf.

/3/ Form 2555 (Foreign Earned Income) is "for use by U.S. citizens and resident aliens only." IRS Form 2555 (heading) (certain capitals omitted).

/4/ Apparently, collection of the penalty is being contested in Tax Court proceedings docketed as Nos. 14482-SL, 5516-12SL, and 5518-12SL.

/5/ The withheld tax was deemed paid on the date the return for the year was due. See I.R.C. section 6513(b)(1); Baral v. United States, 528 U.S. 431, 435 (2000). Because plaintiffs resided abroad, however, they received an automatic extension until June 15, 2006, to file their return for tax year 2005. See I.R.C. section 6072(c) (applicable to "nonresident alien individuals," such as Ms. del Rosario). The filing of a tax return reporting overpayments constitutes a simultaneous filing of such a claim. See 26 CFR section 301.6402-3(a)(5); VanCangan v. United States, 231 F.3d 1349, 1351 (Fed. Cir. 2000).

/6/ While Subsection 6511(a) did not preclude plaintiffs from filing their 2005 tax return with the IRS in 2010, Subsection 6511(b) would categorically limit the period for which plaintiffs could obtain an actual refund. Under Subsection 6511(b), plaintiffs may obtain a credit or refund not exceeding the portion of the taxes paid within three years of making the claim. I.R.C. section 6511(b). Therefore, a claim made in 2010 on taxes paid fully in 2005 would only reach back to 2007, rendering the maximum amount of recovery $ 0.00. For a more thorough discussion of this "look-back-period" limitation, see Murdock, 103 Fed. Cl. at 394-95. The look-back-period limitation is a constraint on remedy, not jurisdiction. Id.

Notably, the periods of limitation on suits are set out in I.R.C. section 6532, which generally allows suits to be brought six months after the filing of a claim for refund in accord with I.R.C. section 7422(a), and up to two years following the denial or disallowance by the I.R.S. of the claim for refund. See section 6532(a)(1).

Post by **The Observer** » Fri Sep 13, 2013 4:27 pm

And our daring duo try once again to get their money back:

NORMAN DOUGLAS DIAMOND,
Plaintiff-Appellant,
and
ZAIDA GOLENA DEL ROSARIO,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.

Release Date: SEPTEMBER 12, 2013

NOTE: This disposition is nonprecedential.

UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

Appeal from the United States Court of Federal Claims
in No. 12-CV-0358, Judge Charles F. Lettow.

Decided: September 12, 2013

NORMAN DOUGLAS DIAMOND, of Ome City, Japan, pro se.

ZAIDA GOLENA DEL ROSARIO, of Ome City, Japan, pro se.

JANET A. BRADLEY, Attorney, Appellate Section, Tax Division, United States Department of Justice, of Washington, DC, for defendant-appellee. With her on the brief were KATHRYN KENEALLY, Assistant Attorney General and BRIDGET M. ROWAN, Attorney.

Before LOURIE, PROST, and TARANTO, Circuit Judges.

PER CURIAM.

Douglas Diamond and his wife, Zaida Golena Del Rosario, lived in Japan in 2005. Diamond v. United States, 107 Fed. Cl. 702, 703 (Fed. Cl. 2012). During that year, they paid federal income tax to the United States through a withholding of $ 10,645.40 on investment income. Id. They filed a timely tax return in June 2006 in which they claimed a refund for the entire amount withheld. Id. In that return, however, they failed to provide basic information such as their social security numbers and details about deductions they claimed to reduce their foreign income to zero. Id. The Appellants also altered several official tax forms they included with their return. Id. As a result, the Internal Revenue Service ("IRS") rejected the return and provided Appellants thirty days to file a corrected one -- which they failed to do. Id. at 704.

In October 2010, the Appellants filed a second return claiming the same refund. Id. While they cured some of the deficiencies present in their first return, many persisted. For example, the Appellants again failed to provide information about deductions they claimed to reduce their foreign income to zero. Id. And while Mr. Diamond's social security number was provided, his wife's social security number (or individual tax identification number) still was not. Id.

The IRS responded in writing to the Appellants second incomplete return. See Appellants' Reply Br. 36-41. It requested that the Appellants provide the additional information necessary to process the return and that they complete several standard tax forms. Id. The IRS appears to have included "a copy of each form or schedule" that it requested from them. Id. The Appellants did not fully comply with the IRS's request, and their second return was ultimately rejected. Diamond, 107 Fed. Cl. at 704.

In June 2012, the Appellants filed suit against the United States in the Court of Federal Claims to collect the portion of their investment income that they allege was improperly withheld in 2005. Id. Upon motion by the government, the court dismissed their suit for lack of subject matter jurisdiction after concluding that neither of the two returns constituted a proper claim for refund. Id. at 707. The Appellants assert the dismissal was made in error. We disagree.

The Court of Federal Claims has jurisdiction over a claim for refund if "the taxpayers' submissions to the IRS constitute a claim for refund." Waltner v. United States, 679 F.3d 1329, 1333 (Fed. Cir. 2009), cert. denied, 133 S. Ct. 319 (2012). To constitute a claim for refund, a return "must contain sufficient data to allow calculation of tax and evince[] an honest and genuine endeavor to satisfy the law." Id. (internal quotation marks removed). As the Court of Federal Claims correctly concluded, the Appellants' returns satisfied neither of those criteria and therefore did not constitute proper claims for refund. Diamond, 107 Fed. Cl. at 706-07. In both returns, the Appellants refused to provide information about their deductions to substantiate their claim that they had no taxable foreign income. And neither of the returns demonstrates an honest or genuine endeavor to satisfy the requirements of the tax laws: the Appellants consistently refused to provide information necessary to process them and did not fully complete the official forms required by the IRS.

We therefore affirm the decision of the Court of Federal Claims dismissing the Appellants' suit for lack of subject matter jurisdiction. 1 See Waltner, 679 F.3d at 1334 (affirming dismissal of refund suit for lack of subject matter jurisdiction).

AFFIRMED

COSTS

Each party shall bear their own costs.

FOOTNOTES:

/1/ The Appellants filed a motion requesting that we issue two "specific rulings" in our opinion. Appellants' Mot. for Specific Rulings 3-5. The motion is denied. The subject matter of the "specific rulings" that the Appellants request is irrelevant to our disposition of this case.

Post by **The Observer** » Thu Dec 19, 2013 3:40 pm

Again, our unabashed couple push on with with even more motions for irrelevant documents:

NORMAN DOUGLAS DIAMOND, AND ZAIDA GOLENA DEL ROSARIO,
Plaintiffs, pro se,
v.
THE UNITED STATES,
Defendant.

Release Date: DECEMBER 17, 2013

NOT TO BE PUBLISHED

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

Filed: December 17, 2013

MEMORANDUM OPINION AND ORDER REGARDING
PLAINTIFFS' MOTION TO COMPEL

I. PROCEDURAL HISTORY

On April 25, 2013, Norman Douglas Diamond and Zaida Golea?a Del Rosario ("Plaintiffs") filed a Complaint in the United States Court of Federal Claims seeking refunds for their 2006-2011 tax years (Compl. paragraph 1), as well as an abatement of a $ 5,000 filing penalty assessed for the 2008 tax year (Compl. paragraphs 2, 157).

On August 23, 2013, the Government filed a Motion To Dismiss, pursuant to RCFC 12(b)(1) and 12(b)(6) ("Gov't Mot."). On September 3, 2013, Plaintiffs filed a Response. On September 20, 2013, the Government filed a Reply. On October 8, 2013, Plaintiffs filed a Sur-Reply. On October 11, 2013, the court issued an Order stating that the Government's August 23, 2013 Motion To Dismiss must be considered as one for summary judgment under RCFC 56, 1 since both parties relied on matters outside the pleadings.

On October 23, 2013, Plaintiffs filed a Response to the court's October 11, 2013 Order, together with a Motion To Compel the Government to produce a variety of forms and communications that appear to concern a related case filed by Plaintiffs in the United States Tax Court, Docket No. 14482-10SL. On October 28, 2013, Plaintiffs filed a Supplement to the October 23, 2013 Response. On November 6, 2013, the Government filed a Notice Of Election Not To File Supplemental Reply. That same day, the Government filed an Opposition to Plaintiffs' October 23, 2013 Motion To Compel. On November 18, 2013, Plaintiffs filed a Reply.

On November 22, 2013, the court issued an Order that deferred ruling on Plaintiffs' October 23, 2013 Motion To Compel, to allow Plaintiffs to file a single submission to demonstrate why the discovery requested in the October 23, 2013 Motion To Compel was warranted under RCFC 56(d).

On December 2, 2013, Plaintiffs filed a Sur-Reply ("Pl. Resp."). On December 5, 2013, the Government filed a Reply ("Gov't Reply").

II. DISCUSSION

A. Standard Of Review.

The party seeking discovery pursuant to RCFC 56(d) 2 "must set forth 'with some precision,' the evidence it hopes to obtain, how this evidence would likely disclose issues of material fact, and why it is unable to access such evidence without further discovery." Padilla v. United States, 58 Fed. Cl. 585, 593 (2003) (quoting Simmons Oil Corp. v. Tesoro Petroleum Corp., 86 F.3d 1138, 1144 (Fed. Cir. 1996)); see also C.W. Over & Sons, Inc. v. United States, 44 Fed. Cl. 18, 23 (1999) ("To obtain discovery, the party must state, by affidavit, explicit reasons why discovery is required in opposition to the motion for summary judgment."). The movant also must demonstrate how the requested discovery "will allow the party to oppose summary judgment," Chevron U.S.A. Inc. v. United States, 72 Fed. Cl. 817, 819 (2006), and "rebut the movant's showing of the absence of a genuine issue of [material] fact." Simmons Oil Corp., 86 F.3d at 1144 (quoting Willmar Poultry Co. v. Morton-Norwich Prods., Inc., 520 F.2d 289, 297 (8th Cir. 1975), cert. denied, 424 U.S. 915, (1976)).

Although "[m]otions for additional discovery under [RCFC 56(d)] are generally favored and are liberally granted," Chevron U.S.A. Inc., 72 Fed. Cl. at 819, discovery need not be allowed "merely to satisfy a litigant's speculative hope of finding some evidence that might tend to support a complaint." Pure Gold, Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 627 (Fed. Cir. 1984). Because the party invoking RCFC 56(d) must show how "it cannot present facts essential to justify its opposition," the court is required to evaluate whether the discovery requested is germane to the issues presented. See Chevron U.S.A. Inc., 72 Fed. Cl. at 819 ("The sole grounds for Defendant's motion for summary judgment are waiver and estoppel. Accordingly, plaintiffs' request for additional discovery should be focused on the issues of wavier and estoppel.").

In Theisen Vending Co., Inc. v. United States, 58 Fed. Cl. 194 (2003), the United States Court of Federal Claims identified five requirements that must be satisfied before a court should allow discovery, pursuant to RCFC 56(d):

[T]he non-movant must by affidavit and supporting
papers: (1) specify the particular factual discovery
being sought, (2) explain how the results of the
discovery are reasonably expected to engender a genuine
issue of material fact, (3) provide an adequate factual
predicate for the belief that there are discoverable
facts sufficient to raise a genuine and material
issue, (4) recite the efforts previously made to
obtain those facts, and (5) show good grounds for
the failure to have discovered the essential facts
sooner.

Id. at 198; see also Clear Creek Cmty. Servs. Dist. v. United States, 100 Fed. Cl. 78, 83 (2011) (applying the Theisen Vending test); Chevron U.S.A. Inc., 72 Fed. Cl. at 819 (same); Jade Trading, LLC v. United States, 60 Fed. Cl. 558, 565 (2004) (same).

B. Whether Discovery Is Warranted In This Case.

Given Plaintiffs' pro se status, the court treats Plaintiffs' October 23, 2013 Motion To Compel and December 2, 2013 Sur-Reply, collectively, as a motion for additional discovery, pursuant to RCFC 56(d). The October 23, 2013 Motion To Compel requests that the Government produce: (1) Forms 13128, for years 2002 and 2005-2008; (2) Form 14027-B, for the Plaintiffs "to photocopy, complete, and mail to [the Government's] employee, Miss Fowers;" and (3) the Government's "position," on or before November 2, 2008, as to the meaning of language contained in a letter, dated November 2, 2008, from Mr. Ernest E. Smart.

Plaintiffs argue that the aforementioned discovery is warranted under RCFC 56(d) for several reasons. First, Forms 13128 will establish that the Government was "timely aware of [P]laintiffs' claims for refunds of withholding," contrary to the position taken by the Government in a related tax case filed by Plaintiffs in the United States Court of Federal Claims. 3 Pl. Resp. paragraph 2. Second, the requested documents will shed light on the Government's rationale for assessing frivolous filing fees against Plaintiffs "for some tax years." Pl. Resp. paragraphs 3-4, 14-16. 4 Third, the discovery will elucidate how the Government processed Plaintiffs' respective applications for new social security numbers, and why the Government's litigating position on the relevance of Plaintiffs' social security number applications has differed in various lawsuits brought by Plaintiffs before the United States Tax Court and United States Court of Federal Claims. Pl. Resp. paragraphs 5-10, 15.

In response, the Government states that the Motion To Dismiss raises two arguments. First, that the court does not have subject matter jurisdiction to adjudicate Plaintiffs' claim for a refund of the $ 5,000 filing fee for the 2008 tax year, because Plaintiffs have not paid that liability in full. Gov't Mot. 1. Second, Plaintiffs' claims for refund for their 2006-2011 tax years do not state claims upon which relief can be granted, because Plaintiffs have been credited with the tax refunds they seek for 2006-2011. Gov't Mot. 2. Since Plaintiffs have requested documents that "have no bearing on the determination of these issues," and instead concern unrelated issues about their communications with the Internal Revenue Service and the timeliness of claims for refund, discovery is not warranted. Gov't Reply 2. Even if the discovery requested relates to the 2008 penalty at issue, Plaintiffs' arguments go to the merits, not the jurisdictional issue presented in the Motion To Dismiss. Gov't Reply 3 n.1.

In Simmons, the United States Court of Appeals for the Federal Circuit held that the party invoking RCFC 56(d) must state, "with some precision," the materials they want to discover, exactly how those materials will aid in opposing summary judgment, and why the discovery will help "rebut the movant's showing of the absence of a genuine issue of [material] fact." Simmons, 86 F.3d at 1144. 5

The August 23, 2013 Motion To Dismiss presents two specific and limited arguments. Plaintiffs' requested discovery, however, concerns issues unrelated to the Government's Motion, i.e., the timeliness of Plaintiffs' claims for refunds of withholding, the Government's rationale for assessing that fee, and the Government's processing of Plaintiffs' applications for new social security numbers. Although Plaintiffs have stated with precision what materials they hope to discover, they have not shown that these documents even are marginally relevant to the issues presented in the Government's August 23, 2013 Motion To Dismiss. Information that is not relevant cannot help Plaintiffs "oppos[e] summary judgment." Simmons, 86 F.3d at 1144 (explaining that discovery was not warranted because the "motion for summary judgment was based entirely on [a] statute of limitations defense," whereas the plaintiff's argument for discovery was "focused on the merits of [plaintiff's] claim").

Nor have Plaintiffs demonstrated that the requested discovery is "is likely to engender a genuine issue of material fact," Chevron U.S.A. Inc., 72 Fed. Cl. at 819 (emphasis added), because the requested materials concern tangential factual matters that are not "material" to resolution of the Government's Motion To Dismiss. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (defining "material facts" "as facts that might affect the outcome of the suit under the governing law"). Plaintiffs' contention that the requested discovery "appears highly relevant to all of [the Plaintiffs'] cases in all courts" (Pl. Resp. paragraph 14) is a "vague assertion," Simmons Oil Corp., 86 F.3d at 1144, motivated by the "speculative hope of finding some evidence that might tend to support a complaint." See Pure Gold, Inc., 739 F.2d at 627. As a matter of law, such contentions do not warrant discovery under RCFC 56(d). Id. The discovery requested is simply not germane to the factual or legal issues presented in the Government's August 23, 2013 Motion To Dismiss, and thus not "essential to justify [Plaintiffs'] opposition." RCFC 56(d); see also C.W. Over & Sons, Inc., 44 Fed. Cl. at 23 (explaining that the moving party must identify "explicit reasons" why the discovery is "required [to oppose] the motion for summary judgment").

Similarly, Plaintiffs have not satisfied requirements of Theisen Vending. The requested discovery is not "reasonably expected to engender a genuine issue of material fact," and Plaintiffs have not demonstrated "an adequate factual predicate for the belief that there are discoverable facts sufficient to raise a genuine and material issue." Theisen Vending Co., 58 Fed. Cl. at 198. That is because Plaintiffs seek discovery of facts that are irrelevant and not "material" to disposition of the Government's Motion To Dismiss. See U. S. v. Sumitomo Shoji, New York, Inc., 534 F.2d 320, 324 (C.C.P.A. 1976) (stating that the court could "not see what possible relevance" the factual issue had to "resolution of the legal issue here [and thus] the fact issue is not a 'material' one" for purposes of summary judgment). Nor does the requested discovery in this case concern "essential facts." See Theisen Vending Co., 58 Fed. Cl. at 198 (requiring the movant to "show good grounds for the failure to have discovered the essential facts sooner" (emphasis added)). Moreover, Plaintiffs have not demonstrated "how they expect the materials will allow them to rebut Defendant's motion for summary judgment," and, more importantly, it is "not clear to the [c]ourt . . . how these requests for additional discovery [even] pertain to [the Government's] motion for summary judgment." See Chevron U.S.A. Inc., 72 Fed. Cl. at 819 (explaining that in those circumstances, plaintiffs did not satisfy either the Simmons or Theisen standards).

III. CONCLUSION.

For these reasons, Plaintiffs' October 23, 2013 Motion To Compel is denied.

IT IS SO ORDERED.

Susan G. Braden
Judge

FOOTNOTES:

/1/ RCFC 56(d) provides that if the party opposing summary judgment:

[S]hows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify
its opposition, the court may:

(1) defer considering the motion or deny it;

(2) allow time to obtain affidavits or declarations
or to take discovery; or

(3) issue any other appropriate order.

RCFC 56(d).

/2/ The provisions of RCFC 56(d) previously were located in RCFC 56(f). Effective July 15, 2011, however, the Rules of the United States Court of Federal Claims were modified, resulting in the current RCFC 56(d). Although cases decided prior to July 15, 2011 reference RCFC 56(f), instead of 56(d), it is a distinction without difference, since these rules are identical.

/3/ In that case, Plaintiffs sought monetary relief in the form of a refund of income taxes for 2005 that allegedly were wrongfully withheld. See Diamond v. United States, 107 Fed. Cl. 702 (2012).

/4/ It is unclear whether the filing fees referenced by Plaintiffs include a fee assessed for tax year 2008, a fee in this case, or for another year.

/5/ The court is mindful that the pleadings of a pro se plaintiff are held to a less stringent standard than those of litigants represented by counsel. See Haines v. Kerner, 404 U.S. 519, 520 (1972) (holding that pro se complaints, "however inartfully pleaded," are held to "less stringent standards than formal pleadings drafted by lawyers"). It has been the tradition of this court to examine the record "to see if [a pro se] plaintiff has a cause of action somewhere displayed." Ruderer v. United States, 412 F.2d 1285, 1292 (Ct. Cl. 1969). Nevertheless, although the court may excuse ambiguities in a pro se plaintiff's pleadings, it "does not excuse its failures." Henke v. United States, 60 F.3d 795, 799 (Fed. Cir. 1995).

Post by **LPC** » Tue Feb 25, 2014 12:32 pm

The Supreme Court has denied cert. to the Federal Court of Appeals on the decision denying a refund for 2005. Diamond v. United States, No. 13-828 (U.S.S.C. 2/24/2014).

Post by **The Observer** » Wed Apr 09, 2014 3:19 pm

And the Diamonds found no better luck with the Federal Court of Claims:

NORMAN DOUGLAS DIAMOND AND ZAIDA GOLENA DEL ROSARIO,
Plaintiffs, pro se,
v.
THE UNITED STATES,
Defendant.

Release Date: APRIL 04, 2014

Published by Tax Analysts(R)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

Filed: April 4, 2014

Claim for Relief, RCFC 8(a)(2); Motion to Dismiss,
RCFC 12(b)(1), 12(b)(6); Presenting Matters Outside
Pleadings, RCFC 12(d); Motion for Summary Judgment,
RCFC 56; When Facts Unavailable to Nonmovant, RCFC 56(d);
Privacy Act of 1974, 5 U.S.C. section 552a;
26 U.S.C. section 6402 (offsetting overpayments against
liabilities); 26 U.S.C. section 6702 (fees assessed for
frivolous tax returns); Pro Se.

Norman Douglas Diamond & Zaida Golena Del Rosario, Ome City, Tokyo, Plaintiffs, pro se.

Michael J. Ronickher, United States Department of Justice, Tax Division, Washington, D.C., Counsel for the Government.

MEMORANDUM OPINION AND FINAL ORDER

BRADEN, Judge.

This case represents one in a series of pro se Plaintiffs' efforts to obtain relief from federal taxes levied against them. 1 In this case, Plaintiffs seek refunds for tax years 2006-2011, and abatement of a "frivolous" filing fee assessed by the Internal Revenue Service ("IRS"), pursuant to 26 U.S.C. section 6702, for the 2008 tax year. 2

I. RELEVANT FACTUAL BACKGROUND. 3

Norman Douglas Diamond and Zaida Golena Del Rosario (collectively "Plaintiffs") are married United States taxpayers residing in Tokyo, Japan. Pl. Ex. A at 5. From 1992 through 1994, the IRS sent Plaintiffs' tax documents (and other correspondence) to their address in Japan, and displayed Mr. Diamond's social security number on the outside of the envelope. Compl. paragraph 8. Sometime in 1994, Mr. Diamond found an undelivered letter from the IRS in "a public thoroughfare" that publicly displayed his name, address, and social security number. Compl. paragraph 12. As a result of the IRS's actions, Mr. Diamond's social security number was "abused." Compl. paragraph 31. Sometime in 1993 and 1994, Mr. Diamond wrote to the Government, requesting a statement as to how the public display of his social security number complied with the Privacy Act of 1974, 5 U.S.C. section 552a. Compl. paragraph 9. He never received a response. Compl. paragraph 10.

Around February 21, 1994, Ms. Del Rosario applied for a social security number by submitting Form SS-5 (Application for a Social Security Card) to the Social Security Administration ("SSA"). 4 Compl. paragraph 6; Pl. Ex. A at 3. The Complaint alleges that, because of the Government's public display of Mr. Diamond's social security number, he applied for a replacement on March 24, 1994 by submitting Form SS-5 to the SSA. Compl. paragraph 4. Mr. Diamond's application was incomplete. Pl. Ex. A at 62 (A letter from Mr. Diamond explaining that he submitted a "nearly completed Form SS-5," because he intentionally did not list his current social security number and declined to answer other questions). Mr. Diamond's March 24, 1994 application also included an attached letter, stating that he would write "'[a]pplied for' or other suitable response [in the future] on any U.S. [G]overnment document that makes a legal demand for [his] social security number." Pl. Ex. A at 62.

In 2007 and 2009, and on other times during this period, Plaintiffs applied for individual taxpayer identification numbers ("ITIN") by submitting Form W-7 (Application for IRS Individual Taxpayer Identification Numbers) to the IRS. Compl. paragraphs 5, 7, 25-29.

On July 10, 2010, Mr. Diamond submitted a revised application for a replacement social security number to the United States Embassy in Tokyo. Pl. Ex. A at 55. On September 7, 2010, the SSA denied Mr. Diamond's application. Compl. paragraph 4.

In January 2011, after rejecting both of Plaintiffs' ITIN applications, Plaintiffs received ITINs. Compl. paragraphs 5, 7, 34. The Complaint alleges that, to date, the SSA has not acted on Ms. Del Rosario's application for a social security number. Compl. paragraph 6.

The court now turns to the relevant facts for each of the tax years 2006-2011, and then to the frivolous filing fee assessed for the 2008 tax year.

2006 Tax Year

On June 9, 2007, Plaintiffs submitted a joint tax return by filing Form 1040 with the IRS ("2006 tax return"), requesting a refund of $ 10,762.35, which was received by the IRS on June 16, 2007. Compl. paragraphs 40, 49; Pl. Ex. A at 5-6. This return reported $ 2,511.21 in adjusted gross income, and included: Schedule A (Itemized Deductions); Schedule D (Capital Gains and Losses); a Capital Loss Carryover Worksheet; Form 6781 (Gains and Losses From Section 1256 Contracts and Straddles); Form 1116 (Foreign Tax Credit); and an accompanying "statement concerning the tax return." Pl. Ex. A at 8-20. The statement explained, among other things, that "some estimates and errors are nearly certain." Pl. Ex. A at 21-23.

The 2006 tax return also contained several anomalies. First, neither Mr. Diamond nor Ms. Del Rosario included their social security numbers on the return, instead referring the IRS to the attached "statement concerning the tax return" through a notation that read "see statement." Pl. Ex. A at 5. Second, Plaintiffs listed "$ 0.00" in income, writing "see statement" on line 7 (wages, salaries, tips, etc). Pl. Ex. A at 5. Third, Plaintiffs crossed out portions of the jurat above the signature line on the 2006 tax return. 5 Pl. Ex. A at 6. Specifically, Plaintiffs crossed out the text "to the best of my knowledge and belief, [the statements contained herein] are true, correct, and complete," replacing that line with "the accompanying statements explain our knowledge and belief." Comp. Ex. A at 6. Plaintiffs also made several additions on the 2006 tax return, crossing out various lines of text and replacing them with handwritten notes. Pl. Ex. A at 6. Fourth, many of the forms accompanying Plaintiffs' Form 1040 contained handwritten alterations and added explanatory text. See Pl. Ex. A at 8-20.

On January 15, 2008, the IRS informed Plaintiffs that the 2006 tax return was deemed frivolous under I.R.C. section 6702. Compl. paragraph 43. Accordingly, on June 2, 2008, the IRS assessed a $ 5,000 fee against Plaintiffs. Gov't Mot. Ex. B at B-9; see also Pl. Resp. Ex. A at 11.

On May 19, 2009, the IRS issued a Notice of Federal Tax Lien, because Plaintiffs failed to pay the civil penalties assessed pursuant to I.R.C. section 6702 for tax year 2006. Pl. Resp. Ex. A at 9-14. On June 9, 2010, following a Collection Due Process hearing, the IRS issued a Notice of Determination that sustained the Notice of Federal Tax Lien for tax year 2006. Pl. Resp. Ex. A at 9-14.

On February 6, 2012, Mr. Diamond filed an individual 2006 Form 1040 tax return ("corrected 2006 tax return") that reported $ 1,048 in adjusted gross income and requested a refund of withholding. Gov't Mot. Ex. A at A-2. This return did not have the same deficiencies as the 2006 tax return and the IRS assessed $ 0.00 in tax liability. Gov't Mot. Ex. A at A-2. Since Mr. Diamond made payments of $ 116.95 through withholding, the IRS applied this overpayment to Mr. Diamond's other outstanding tax liabilities. Gov't Mot. Ex. A at A-2. On May 29, 2013, payments made by Mr. Diamond of $ 500 and $ 150 also were applied towards his outstanding tax liability for the 2005 tax year. Gov't Mot. Ex. A at A-2. The current balance for Mr. Diamond's 2006 tax year account is $ 0.00. Gov't Mot. Ex. A at A-3.

2007 Tax Year:

It appears that, on August 7, 2008, Plaintiffs filed a tax return with the IRS, although that return was not included in Plaintiffs' submissions to the court. Pl. Ex. A at 31. On August 3, 2010, Plaintiffs spoke with an IRS representative who pointed out certain defects in Plaintiffs' August 7, 2008 return. Compl. paragraph 73.

On August 27, 2010, the IRS sent a letter to Plaintiffs stating that Plaintiffs' August 7, 2008 return also was deemed to be frivolous under I.R.C. section 6702, because there was "no basis in the law for [Plaintiffs'] position." Pl. Ex. A at 30-31; see also Compl. paragraph 71. That letter warned that Plaintiffs would be fined $ 5,000, unless they filed a corrected tax return within 30 days after receipt of the letter. Pl. Ex. A at 31-32. The letter did not, however, explain what aspect of Plaintiffs' tax return the IRS considered to be frivolous. Compl. paragraph 71.

On September 5, 2010, Plaintiffs filed a joint tax return reporting $ 2,505.76 in adjusted gross income ("2007 tax return"), together with: Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Tax Return); Form W-7; a Foreign Earned Income Tax Worksheet; a Qualified Dividends and Capital Gain Tax Worksheet; Schedule B (Interest and Ordinary Dividends); Schedule D; a Capital Loss Carryover Worksheet; Form 6781; and Form 1116. Pl. Ex. A at 35-54. 6

Like the 2006 tax return, the 2007 tax return contained several anomalies. First, rather than providing their social security numbers, Plaintiffs wrote "[social security number]: applied for . . . ITIN: rejected." Pl. Ex. A at 35. Second, Plaintiffs listed "$ 0.00" in income, writing "see statement" on line 7 (wages, salaries, tips, etc). Pl. Ex. A at 35. Third, although Plaintiffs did not alter the jurat on this tax return, they included a notation that the jurat was "signed in obedience of instructions from [the United States] Treasury." Pl. Ex. A at 36. Fourth, many of the forms accompanying Plaintiffs' Form 1040 contained handwritten alterations and statements. See generally Pl. Ex. A at 35-54. Nevertheless, the IRS accepted the return and assessed $ 0.00 in taxes. Gov't Mot. Ex. A at A-5. Since Plaintiffs made $ 131.49 in payments through withholding, that overpayment was applied to Plaintiffs' other outstanding tax liabilities. Gov't Mot. Ex. A at A-5. 7

On February 24, 2011, the IRS issued a Letter 1058 to Plaintiffs, stating that the IRS intended to issue a levy against Plaintiffs' bank accounts, wages, or other assets, because they had an outstanding unpaid balance on their 2005, 2006, and 2007 tax years. Pl. Ex. B at 32. On March 10, 2011, the IRS received Form 12153 from Plaintiffs, requesting a Collection Due Process Hearing. Pl. Ex. B at 32.

On June 13, 2011, the IRS received a letter from Plaintiffs requesting that the civil penalty assessed pursuant to I.R.C. section 6702 for tax year 2007 be abated. Pl. Ex. B at 7-8. On September 20, 2011, the IRS disallowed that claim. Pl. Ex. B at 7-8.

On February 9, 2012, the IRS issued a Notice of Determination that sustained the proposed levy. Pl. Ex. B at 30-34.

Plaintiffs' current balance for the 2007 tax year is $ 0.00. Gov't Mot. Ex. A at A-6.

2008 Tax Year

At an unidentified time, Plaintiffs submitted "what they believed to be a United States federal tax return for year 2008." Compl. paragraph 81. The IRS responded that it also considered this return to be frivolous under I.R.C. section 6702. Compl. paragraph 82.

On February 6, 2012, Mr. Diamond filed an individual 2008 1040 tax return with the IRS ("2008 tax return"), reporting $ 6,490 in adjusted gross income and $ 0.00 due in taxes. Gov't Mot. Ex. A at A-8. Because Mr. Diamond had made $ 192.31 in payments through withholding, this overpayment remains as a credit. Gov't Mot. Ex. A at A-8. Unlike prior years, the IRS did not apply that credit to Mr. Diamond's outstanding tax liability for other years, because his account had "been frozen [by the IRS] as [Mr. Diamond] pursues . . . various other litigations against the IRS." Gov't Mot. 7. Mr. Diamond's current balance for the 2008 tax year is a credit of $ 192.31. Gov't Mot. Ex. A at A-9.

2009 Tax Year

On October 7, 2010, Plaintiffs filed a joint 2009 1040 tax return reporting $ 36,443 in adjusted gross income ("2009 tax return"). Gov't Mot. Ex. A at A-11. The IRS assessed $ 0.00 in tax. Gov't Mot. Ex. A at A-11. Because Plaintiffs made $ 245.98 in payments through withholding, this amount remains as a credit. Gov't Mot. Ex. A at A-11-12. Like the 2008 account, Plaintiffs' 2009 account has been frozen, and the overpayment has not been applied, because of litigation being pursued by Mr. Diamond. Gov't Mot. 7.

On February 7, 2011, the IRS issued a Notice of Adjusted Refund to Plaintiffs, stating that Plaintiffs were due a refund of $ 247.44, instead of than $ 245.98. Pl. Ex. B at 1-3. The Notice stated, however, that Plaintiffs would "receive a refund . . . within 4-6 weeks as long as [Plaintiffs] don't owe tax or debts [the IRS is] required to collect." Pl. Ex. B at 1. The current balance of Plaintiffs' 2009 account is a $ 245.98 credit. Gov't Mot. Ex. A at A-12.

2010 Tax Year

On August 15, 2011, Plaintiffs filed a joint 2010 1040 tax return reporting $ 34,079 in adjusted gross income. Gov't Mot. Ex. A at A-14. The IRS assessed $ 0.00 in tax. Because Plaintiffs made $ 157.50 in payments through withholding, this amount was applied towards Plaintiffs' outstanding tax liability for the 2006 tax year. Gov't Mot. Ex. A at A-14.

On September 26, 2011, the IRS issued a Notice to Plaintiffs, informing them that the IRS had applied the $ 157.50 overpayment for the 2010 tax year towards Plaintiffs' outstanding liability for the 2006 tax year. Pl. Ex. B at 10-12. The current balance on Plaintiffs' account for the 2010 tax year is $ 0.00. Gov't Mot. Ex. A at A-15.

2011 Tax Year

On June 14, 2012, Mr. Diamond filed an individual 2011 1040 tax return reporting $ 1,089 in adjusted gross income. Gov't Mot. Ex. A at A-17. The IRS assessed $ 0.00 in taxes. Gov't Mot. Ex. A at A-17. Because Mr. Diamond made $ 36.24 in payments through withholding, the IRS also applied this amount towards his outstanding liability for the 2006 tax year. Gov't Mot. Ex. A at A-17.

On July 16, 2012, the IRS issued a letter to Mr. Diamond, explaining that the IRS applied the $ 36.24 overpayment to the outstanding liability for the 2006 tax year. Compl. paragraph 101; see also Pl. Ex. B at 55 (July 16, 2012 IRS Notice). The letter stated that, since the IRS applied the 2011 overpayment to outstanding liability for the 2006 tax year, Plaintiff was "due a refund of $ 0.00." Pl. Ex. B at 55. The current balance of Mr. Diamond's 2011 account is $ 0.00. Gov't Mot. Ex. A at A-18.

Frivolous Fee

On July 7, 2011, the IRS assessed a $ 5,000 fee against Mr. Diamond, pursuant to I.R.C. section 6702, for filing a frivolous income tax return in 2008 ("the 2008 fee"). Gov't Mot. Ex. B at B-20. 8

On August 5, 2011, the IRS received a letter from Mr. Diamond, requesting that the agency abate the 2008 fee. Pl. Ex. B at 42. On May 17, 2012, the IRS disallowed Mr. Diamond's request, because he failed to respond to an IRS 3176 letter or CP72 notice in a timely manner. 9 Pl. Ex. B at 42-43; see also Compl. paragraph 107. The August 5, 2011 letter advised Mr. Diamond that he could challenge the 2008 fee either in a United States District Court or the United States Court of Federal Claims. Pl. Ex. B at 42.

On May 31, 2012, Mr. Diamond filed a petition in the United States Tax Court, challenging the IRS' failure to abate the 2008 fee. Compl. paragraph 109; see also Diamond v. C.I.R., No. 13878-12S (T.C. Aug. 28, 2012). On July 27, 2012, Mr. Diamond requested that the United States Tax Court transfer his case to the United States Court of Federal Claims. See Diamond v. C.I.R., No. 13878-12S (T.C. Aug. 28, 2012). On August 28, 2012, the United States Tax Court dismissed the petition for lack of subject matter jurisdiction. Id.

II. PROCEDURAL HISTORY.

On April 25, 2013, Plaintiffs filed a Complaint in the United States Court of Federal Claims seeking a refund of withholding for their 2006-2011 tax years and an abatement of the 2008 fee assessed, pursuant to I.R.C. section 6702, for the 2008 tax year. The Complaint alleges that Plaintiffs are owed $ 881.93 in refunds for tax years 2006-2011. Compl. paragraph 157. 10 The Complaint also alleges that the Government incorrectly determined that Mr. Diamond's 2008 tax return was frivolous and requests the abatement of the $ 5,000 fee. Compl. paragraphs 2, 106, 157.

On August 23, 2013, the Government filed a Motion To Dismiss, pursuant to RCFC 12(b)(1) and 12(b)(6). On September 3, 2013, Plaintiffs filed a Response. On September 20, 2013, the Government filed a Reply. On October 8, 2013, Plaintiffs filed a Sur-Reply to the Government's Motion To Dismiss.

On October 11, 2013, the court issued an Order advising the Government that the August 23, 2013 Motion To Dismiss would be considered as one for summary judgment under RCFC 56, since both parties had substantially relied on matters outside the pleadings. See Order, Diamond v. United States, (No. 13-292), Dkt. No. 14; see also Martin v. United States, 96 Fed. Cl. 627, 629 (2011) ("When matters outside the pleadings are presented and not excluded by the [c]ourt, a motion to dismiss under Rule 12(b)(6) is to be converted to a motion for summary judgment[.]"). Pursuant to RCFC 12(d), 11 the court's October 11, 2013 Order directed Plaintiffs to file any new information relevant to the factual contentions in Government's August 23, 2013 Motion To Dismiss on or before November 8, 2013. On October 23, 2013, Plaintiffs filed a Response, together with a Motion To Compel the Government to produce forms and communications concerning a related case filed by Plaintiffs in the United States Tax Court, Docket No. 14482-10SL. On October 28, 2013, Plaintiffs filed a Supplement to the October 23, 2013 Response. On November 6, 2013, the Government filed a Notice Of Election Not To File Supplemental Reply and an Opposition to Plaintiffs' October 23, 2013 Motion To Compel. On November 18, 2013, Plaintiffs filed a Reply.

On November 22, 2013, the court issued an Order that deferred ruling on Plaintiffs' October 23, 2013 Motion To Compel, to allow Plaintiffs to file a single submission to demonstrate why the discovery requested in the October 23, 2013 Motion To Compel was warranted under RCFC 56(d). 12 On December 2, 2013, Plaintiffs filed a Response. On December 5, 2013, the Government filed a Reply. On December 17, 2013, the court issued a Memorandum Opinion And Order denying Plaintiffs' October 23, 2013 Motion To Compel.

On January 2, 2014, the court issued an Order instructing the Clerk not to accept any additional filings in this case.

III. DISCUSSION.

A. Jurisdiction.

The United States Court of Federal Claims has jurisdiction under the Tucker Act, 28 U.S.C. section 1491, "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." 28 U.S.C. section 1491(a)(1). The Tucker Act, however, is "a jurisdictional statute; it does not create any substantive right enforceable against the United States for money damages. . . . [T]he Act merely confers jurisdiction upon [the United States Court of Federal Claims] whenever the substantive right exists." United States v. Testan, 424 U.S. 392, 398 (1976). Therefore, to pursue a substantive right under the Tucker Act, a plaintiff must identify and plead an independent contractual relationship, Constitutional provision, federal statute, and/or executive agency regulation that provides a substantive right to money damages. Todd v. United States, 386 F.3d 1091, 1094 (Fed. Cir. 2004) ("[J]urisdiction under the Tucker Act requires the litigant to identify a substantive right for money damages against the United States separate from the Tucker Act[.]"); see also Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc) ("The Tucker Act . . . does not create a substantive cause of action; in order to come within the jurisdictional reach and the waiver of the Tucker Act, a plaintiff must identify a separate source of substantive law that creates the right to money damages. In the parlance of Tucker Act cases, that source must be 'money-mandating.'").

The Tucker Act authorizes the United States Court of Federal Claims to adjudicate tax refund claims if a taxpayer has paid the full assessed federal tax liability and timely filed a refund claim with the IRS stating the grounds for the claim. See 28 U.S.C. section 1491(a); I.R.C. section 6511(a), 7422(a); see also Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993) (holding that a tax refund claim must be dismissed if the "principal tax deficiency has not been paid in full"). If the claim is denied by the IRS and the taxpayer timely files suit, the United States Court of Federal Claims has jurisdiction to adjudicate the tax refund claim. See I.R.C. section 6532(a); see also 28 U.S.C. section 1346(a)(1). The issue of whether the court has jurisdiction over Plaintiffs' claim for abatement of the 2008 fee is discussed more fully below.

B. Standard of Review For Pro Se Litigants.

The pleadings of a pro se plaintiff are held to a less stringent standard than those of litigants represented by counsel. See Haines v. Kerner, 404 U.S. 519, 520 (1972) (holding that pro se complaints, "however inartfully pleaded," are held to "less stringent standards than formal pleadings drafted by lawyers"). It has been the tradition of this court to examine the record "to see if [a pro se] plaintiff has a cause of action somewhere displayed." Ruderer v. United States, 412 F.2d 1285, 1292 (Ct. Cl. 1969). Nevertheless, while the court may excuse ambiguities in a pro se plaintiff's complaint, the court "does not excuse [a complaint's] failures." Henke v. United States, 60 F.3d 795, 799 (Fed. Cir. 1995).

C. Standard Of Review For A Motion To Dismiss Pursuant To RCFC 12(b)(1).

A challenge to the United States Court of Federal Claims'" general power to adjudicate in specific areas of substantive law. . . . is properly raised by a [Rule] 12(b)(1) motion." Palmer v. United States, 168 F.3d 1310, 1313 (Fed. Cir. 1999); see also RCFC 12(b)(1) (allowing a party to assert, by motion, "lack of subject-matter jurisdiction"). When considering whether to dismiss an action for lack of subject matter jurisdiction, the court is "obligated to assume all factual allegations [of the complaint] to be true and to draw all reasonable inferences in plaintiff's favor." Henke, 60 F.3d at 797.

D. Standard For Decision On A Motion For Summary Judgment.

On a motion for summary judgment, the moving party must establish that there is no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law. See Duramed Pharms., Inc. v. Paddock Labs., Inc., 644 F.3d 1376, 1380 (Fed. Cir. 2011); see also RCFC 56(c). Only genuine disputes of material fact that might affect the outcome of the suit preclude entry of summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) ("As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted."). "[The] existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Id. at 247-48. "Courts are required to view the facts and draw reasonable inferences 'in the light most favorable to the party opposing the [summary judgment] motion.'" Scott v. Harris, 550 U.S. 372, 378 (2007) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)).

In a tax refund suit, "the ruling of the [IRS] Commissioner enjoys a presumption of correctness and a taxpayer bears the burden of proving it to be wrong." Danville Plywood Corp. v. United States, 899 F.2d 3, 7 (Fed. Cir. 1990) (citing Welch v. Helvering, 290 U.S. 111, 115 (1933) ("[The IRS Commissioner's] ruling has the support of a presumption of correctness, and the petitioner has the burden of proving it to be wrong.")); see also Int'l Paper Co. v. United States, 36 Fed. Cl. 313, 322 (1996) ("[A] tax refund suit in the Court of Federal Claims 'is a de novo proceeding, in which the plaintiff bears the burden of proof' with respect to each and every element of its claim." (quoting Sara Lee Corp. v. United States, 29 Fed. Cl. 330, 334 (1993)). Even if the presumption of correctness is overcome, the taxpayer still will carry the burden of proof at trial to show a finding contrary to that of the IRS. See Helvering v. Taylor, 293 U.S. 507, 515 (1935) ("Unquestionably the burden of proof is on the taxpayer to show that the Commissioner's determination is invalid."); see also Danville Plywood Corp., 899 F.2d at 7 (stating that to overcome the presumption of correctness, "the taxpayer must come forward with enough evidence to support a finding contrary to the Commissioner's determination").

E. Issues Raised By The Government's August 23, 2013 Motion to Dismiss.

1. Whether The United States Court Of Federal Claims
Has Jurisdiction To Adjudicate Plaintiffs' Claim
For Abatement Of The 2008 Fee.

a. The Government's Argument.

The Government argues that the court does not have subject matter jurisdiction to adjudicate Plaintiffs' claim for abatement of the 2008 fee under RCFC 12(b)(1), because Plaintiffs have not paid the fee. Gov't Mot. 5. It is well established that prior to commencing a tax refund suit in the United States Court of Federal Claims, a taxpayer must fully pay all outstanding tax liabilities for the years in question on or before the date the complaint is filed. Gov't Mot. 5 (citing Flora v. United States, 357 U.S. 63, 72-73 (1958) ("[R]efund suits [can] only be maintained upon full payment of the tax alleged to be due."), aff'd on reh'g, 362 U.S. 145 (1960); Ledford v. United States, 297 F.3d 1378, 1382 (Fed. Cir. 2002) (explaining that the United States Court of Federal Claims has jurisdiction to adjudicate federal tax refund claims, but "payment of the assessed taxes in full is a prerequisite to bringing a refund claim")); see also id. 6 (citing Rocovich v. United States, 933 F.2d 991, 993-94 (Fed. Cir. 1991) (requiring full payment of a tax assessment prior to commencing a refund action)). The full payment rule also encompasses penalties separately assessed against the taxpayer, such as those instituted under I.R.C. section 6702. Gov't Mot. 6 (citing Nasharr v. United States, 105 Fed. Cl. 114, 116, 119 (2012) (applying the full payment rule of Flora to "late filing and failure to pay penalties" assessed by the IRS)).

In this case, Plaintiffs have not yet paid the 2008 fee of $ 5,000, which remains an outstanding liability on Plaintiffs' account for the 2008 tax year. Gov't Mot. 6 (citing Gov't Mot. Ex. B at B-21) (IRS Certificate of Assessment)); see also id. (citing Rocovich, 933 F.2d at 944 (stating that IRS transcripts of account are "presumptive proof of a valid assessment where the defendant has produced no evidence to counter this presumption" (internal citations and quotations omitted))). Since Plaintiffs' 2008 fee has not been paid, the court does not have jurisdiction to adjudicate Plaintiffs' abatement claim. Gov't Mot. 6.

b. Plaintiffs' Response.

In response, Plaintiffs reference a May 17, 2012 IRS letter that denied Plaintiffs' claim for abatement of the 2008 fee, but advised that Plaintiffs "may file suit to recover tax, penalties, or other amounts . . . with the United States Court of Federal Claims." Pl. Resp. paragraph 5; see also Pl. Ex. B at 42 (May 17, 2012 IRS Letter). Plaintiffs argue that, if the court may not adjudicate the validity of the 2008 fee, that the Due Process Clause of the Fifth Amendment to the United States Constitution has been violated. Pl. Resp. paragraph 6. Plaintiffs further assert that the IRS has not adequately explained why Plaintiffs' 2008 tax return was deemed frivolous. Pl. Resp. paragraphs 20, 24, 40. Finally, Plaintiffs assert they already paid some money to challenge the validity of the 2008 penalty assessment. Pl. 10/23/13 Resp. paragraph 4 (explaining that Plaintiffs paid $ 60 when they petitioned for review of the assessment in the United States Tax Court).

c. The Court's Resolution.

Plaintiffs have failed to meet their burden to establish subject matter jurisdiction regarding their claim for abatement of the 2008 fee. 13

The April 25, 2013 Complaint seeks an abatement of the 2008 fee assessed by the IRS. The Government produced a signed and sealed Certificate of Official Record and certified transcripts for Mr. Diamond that show he was assessed a $ 5,000 penalty "For Filing Frivolous Income Tax Return" for the 2008 tax year and that this assessment was unpaid as of August 21, 2013. Gov't Mot. Ex. B at B-19-B-21. Plaintiffs have offered no contradictory evidence. 14 These IRS certificates are presumptively correct where, as here, Plaintiffs offered no evidence to the contrary. See Rocovich, 933 F.2d at 994 ("A Certificate of Assessments and Payments is routinely used to prove that a tax assessment has in fact been made.").

As a matter of law, the "full payment rule requires that taxpayers prepay the tax principal before the Court of Federal Claims will have subject matter jurisdiction over their tax refund action under section 1491." Shore, 9 F.3d at 1527; see also McNeil v. United States, 293 Fed. App'x 758, 760 (Fed. Cir. 2008) ("Under the 'full payment rule,' a taxpayer must fully pay disputed taxes and seek a refund from the IRS before filing suit."). This requirement also applies, with exceptions inapplicable here, to penalties imposed by the IRS. 15 See Nasharr, 105 Fed. Cl. at 119-20 (dismissing case for lack of subject matter jurisdiction where taxpayer had not fully paid a "failure to pay penalty"). Because Plaintiffs did not pay the $ 5,000 fee prior to commencing this lawsuit, the court does not have jurisdiction to adjudicate that claim.

Plaintiffs' remaining arguments against dismissal lack merit. Although the IRS's May 17, 2012 letter may have misled Plaintiffs, the "IRS's letter cannot confer jurisdiction upon this [c]ourt. Jurisdiction of federal courts is 'limited to those subjects encompassed within a statutory grant of jurisdiction.'" Colman v. United States, 96 Fed. Cl. 633, 639 (2011) (quoting Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982)). To the extent Plaintiffs assert a Due Process claim, the court does not have jurisdiction to adjudicate that claim. See LeBlanc v. United States, 50 F.3d 1025, 1028 (Fed. Cir. 1995) ("[C]ounts alleging violation[s] of . . . rights under the Due Process Clauses of the Fifth and Fourteenth Amendments. . . . [are not] a sufficient basis for jurisdiction because they do not mandate payment of money by the [G]overnment."). For these reasons, Plaintiffs' claim for abatement of the 2008 fee must be dismissed.

2. Whether The Complaint States A Claim For Refunds
For Plaintiffs' 2006-2011 Tax Years.

a. The Government's Argument.

The Government also argues that Plaintiffs have failed to state a viable refund claim for the tax years 2006-2011, because "[P]laintiffs have already received the requested refunds, in the form of a credit, and there is no money to recover." Gov't Mot. 6. It is true that Plaintiffs made overpayments in the tax years 2006-2011; however, the IRS has exercised the statutory right under I.R.C. section 6402 to apply those overpayments against Plaintiffs' outstanding tax liabilities in other years. Gov't Mot. 6. Under I.R.C. section 6401(c), when a taxpayer pays an amount in excess of that owed, those amounts are considered overpayments. Gov't Mot. 6. And, pursuant to I.R.C. section 6402(a), the IRS has the authority to credit tax overpayments from one year against tax deficiencies in prior years. Gov't Mot. 7 (citing Donahue v. United States, 33 Fed. Cl. 600, 605 (1995) ("[T]he IRS has the authority under I.R.C. section 6402(a) . . . to credit tax overpayments against tax deficiencies for prior years[.]")); see also I.R.C. section 6402(a) ("In the case of any overpayment, the Secretary . . . may credit the amount of such overpayment . . . against any liability in respect of an internal revenue tax on the part of the person who made the overpayment[.]").

For the tax years at issue in this case, the IRS credited Plaintiffs' overpayments (made through withholding) towards federal taxes due. Gov't Mot. 7. For tax years 2006, 2007, 2010 and 2011, the IRS also applied those credits towards Plaintiffs' unpaid tax liabilities in prior years. Gov't Mot. 7. The credits in tax years 2008 and 2009 remain in Plaintiffs' account, because they have been frozen, while Plaintiffs litigate against the IRS. Gov't Mot. 7. Thus, "there is no relief that the [c]ourt could offer [Plaintiffs] on these claims -- the relief has already been granted by the IRS." Gov't Reply 3.

b. Plaintiffs' Response.

Plaintiffs respond that the IRS's decision to credit Plaintiffs' overpayments against tax deficiencies for prior years was unlawful, because a February 9, 2012 IRS Notice stated that "collection action[s were] suspended." Pl. Resp. paragraph 11-12. Plaintiffs also argue that they were unaware, at the time of filing the Complaint, that the IRS had credited their accounts with overpayments from other years. Pl. Resp. paragraphs 7-10; but see Pl. Sur-Reply paragraph 11 ("Defendant has not refunded overpayments."). Plaintiffs further assert that they were unaware for many years why the IRS deemed their tax returns to be frivolous. Pl. Resp. paragraph 20 (explaining that the IRS has "from time to time stated no reason or changed its reason for alleging that [P]laintiffs' originally submitted returns were frivolous").

Plaintiffs further contend the Government failed to abide by stipulated decisions entered by the United States Tax Court on May 22, 2013 in Docket numbers 5516-12SL and 14482-10SL, because a statement for Plaintiffs' tax accounts from a "Payoff Calculator" lists tax penalties that are inconsistent with the stipulated decisions. Pl. Resp. paragraphs 47-48; see also Pl. Resp. Ex. A at 17-21.

Finally, Plaintiffs argue that the records presented by Government in the Motion To Dismiss are inconsistent with other tax records Plaintiffs received from the IRS over time, which Plaintiffs presented to the court as exhibits. Pl. 10/23/13 Resp. paragraph 6; see also id. (explaining that certain IRS records of Plaintiffs' accounts are inconsistent). Plaintiffs, however, do not identify which exhibits are inconsistent with the Government's records, but appear to reference exhibits attached to Plaintiffs' October 8, 2013 Sur-Reply. Pl. Sur-Reply Ex. A at 5-16. 16

c. The Court's Resolution.

None of the material facts are genuinely in dispute in this case. Both parties agree that Plaintiffs overpaid their taxes during the relevant tax years. Compl. paragraphs 69, 80, 89, 95, 100, 105; see also Gov't Mot. 2-4 (citing Gov't Mot. Ex A (IRS Certificates Of Assessment re: 2006-2011)). The parties also agree that the IRS levied civil penalties against Plaintiffs for a variety of different tax years. Pl. Sur-Reply Ex A at 5-16 (IRS statements of account detailing Plaintiffs' frivolous filing fees for tax years 2005 and 2006); Pl. Ex. B at 7 (IRS letter rejecting Plaintiffs' claim for abatement of civil penalties for tax year 2007); Pl. Ex. B at 30 (February 9, 2012 Notice Of Determination regarding Plaintiffs' request for a Collection Due Process Hearing on civil penalties for tax years 2005-2007); Gov't Mot. 4 (citing Gov't Mot. Ex. B (IRS Certificates Of Assessment re: civil penalties)). In addition, Plaintiffs also do not dispute that overpayments have been credited to satisfy outstanding liabilities for other tax years, although they disagree with the IRS's decision to do so. See Pl. Resp. paragraphs 7-10 (stating only that Plaintiffs did not know at the time of filing the Complaint that the IRS had "already credited [P]laintiffs' account," but are now aware); see also id. paragraph 11 (Plaintiffs knew "of the disposition of refunds owing for years 2010 and 2011."); Pl. Sur-Reply paragraph 8 (same); Pl. Resp. Ex. A at 19 (Stipulated Decision of United States Tax Court stating that "credits in the amounts of $ 157.50 and $ 36.24 were transferred from [Plaintiffs'] income tax accounts for the taxable years 2010 and 2011 . . . to [Plaintiff] Norman Diamond's civil penalty account for the taxable year 2006.").

Therefore, Plaintiffs' generalized statement that the IRS's records of account are temporally inconsistent has no bearing on the accuracy of the records on which the Government relies to support the August 23, 2013 Motion To Dismiss. Plaintiffs do not dispute the accuracy of the IRS's records of their accounts per se, but contend that the balance and payments listed evolved over time. This fact, however, reflects only that those accounts had accrued interest, had been updated to reflect stipulated judgments by the United States Tax Court, and had accrued penalties assessed by the IRS over a long period of time. See generally Gov't Mot. Ex. B at B1-B-21) (detailing interest assessed, additional penalties, and fees and costs imposed on Plaintiffs' civil penalty accounts). Plaintiffs also readily admit that they "do not know how to compute what the amounts should be." Pl. 10/23/13 Resp. paragraph 6. Construing the facts in the light most favorable to the Plaintiffs, at best, this reflects the "existence of some alleged factual dispute . . . [insufficient] to defeat an otherwise properly supported motion for summary judgment." Anderson, 477 U.S. at 247-48 (emphasis added); see also id. at 248 ("Factual disputes that are irrelevant or unnecessary will not be counted."); Crown Operations Intern., Ltd. v. Solutia Inc., 289 F.3d 1367, 1377 (Fed. Cir. 2002) ("[T]he non-moving party must affirmatively demonstrate by specific factual allegations that a genuine issue of material fact exists for trial."). The evolution of these records over time simply reflects the self-evident proposition that tax records are continually updated and demonstrates the costs Plaintiffs have imposed on the IRS to manage, litigate, and attempt to collect on Plaintiffs' accounts.

In short, the dispute before the court is whether the Government has shown Plaintiffs are not entitled to refunds for the 2006-2011 tax years. The IRS has the authority to withhold a tax refund and apply overpayments to a taxpayer's other outstanding liabilities. See I.R.C. section 6402(a) (authorizing the IRS to withhold tax refunds in order to apply them to debts owed to the IRS); see also Donahue, 33 Fed. Cl. at 605 (holding that the IRS was authorized to withhold a taxpayer's refund in order to satisfy other debts); Becker v. United States, 878 F.2d 1444, 1989 WL 43289 *1 (Fed. Cir. May 3, 1989) (I.R.C. 6402(a) "affords the Commissioner, and concomitantly denies [to taxpayers], authority unilaterally [to] direct the application of overpayments to particular tax periods."). That is exactly what occurred here. Plaintiffs' overpayments, in the form of withholding, for the 2006-2011 tax years were treated as credits for those tax years and applied to mitigate other substantial tax liabilities. 17 Plaintiffs have received the benefit of the refund they seek, albeit in a form they seemingly do not desire. As such, the court can afford them no further relief. See, e.g., In re Luongo, 259 F.3d 323, 335 (5th Cir. 2001) ("[T]he [taxpayer] is generally only entitled to a tax refund to the extent that her overpayment exceeds her unpaid tax liability.").

Plaintiffs' remaining arguments also are unavailing. For example, Plaintiffs contend that the IRS's "collection of refunds" was unlawful because a February 9, 2012 IRS Notice of Determination explained that "collection action was suspended." An Attachment to that Notice explained that the "collection statute has been suspended; the collection period allowed by statute to collect these taxes has been suspended by the appropriate computer codes for the tax periods at issue." Pl. Ex. B at 33. As the title of the Notice of Determination suggests, the collection statute suspension concerns I.R.C. section 6330 and section 6331. I.R.C. 6330(e)(1) provides that when a collection due process hearing is requested, "the levy actions which are the subject of the requested hearing . . . shall be suspended for the period during which such hearing, and appeals therein, are pending." I.R.C. section 6330(e)(1) (emphasis added). I.R.C. 6331(a), however, provides that, "if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary is authorized to collect such tax by levy upon property belonging to the taxpayer." Moore v. C.I.R., 114 T.C. 171, 174 (2000). I.R.C. 6331(d) requires "the Secretary . . . to provide the taxpayer with notice, including notice of the administrative appeals available to the taxpayer, before proceeding with collection by levy on the taxpayer's property." Id. Therefore, I.R.C. 6331, in combination with I.R.C. 6330, prohibits "the collection of taxes by way of a levy on a taxpayer's property" unless certain procedural safeguards have been followed. Sego v. C.I.R., 114 T.C. 604, 608 (2000).

By its own terms, the February 9, 2012 IRS Notice Of Determination and, by extension I.R.C. section 6330 protect the taxpayer against "levy actions," not the IRS's decision to apply overpayments to a taxpayer's outstanding liabilities in prior years. In this proceeding, Plaintiffs do not challenge the IRS's decision to levy against their property, but instead seek refunds for the tax years 2006-2011. Nor could Plaintiffs mount such a challenge in the United States Court of Federal Claims, since I.R.C. section 6330(d) provides only for judicial review of the IRS's decision to levy upon a taxpayer property in the United States Tax Court after filing a timely appeal. See I.R.C. section 6330(d) ("The person may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court, shall have jurisdiction with respect to such matter)."). The February 9, 2012 IRS Notice is therefore irrelevant to the legal issue of whether Plaintiffs are entitled to refunds.

To the extent that Plaintiffs assert the Government did not abide by stipulated decisions of the United States Tax Court, any such claim is insufficiently pled. See RCFC 8(a)(2) (requiring a "short and plain statement of the claim showing that the pleader is entitled to relief"); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) ("[T]he pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action." (internal citations omitted)). The Tax Court decisions entered on May 22, 2013 reduce the amounts of penalties assessed against Plaintiffs for the tax years 2005-2007, and concern the February 9, 2012 IRS Notice of Determination. Pl. Resp. Ex. A at 17-21. Those decisions explicitly state, however, that the reductions do not impact any interest on outstanding liabilities, and that "interest will be assessed as provided by law," together with "fees and collection costs . . . due and owing." Pl. Resp. Ex. A at 18; see also id. at 21 (same). To substantiate an alleged violation of those Tax Court decisions, Plaintiffs provide a snapshot of a "Payoff Calculator" table dated May 29, 2013, seven days after issuance of the Tax Court decisions. This table is provided without context or any explanation as to its meaning, and does not disaggregate taxes or penalties, but instead lumps them together into a single amount for each tax year. There is no way to tell what penalties and taxes are, or are not, included in a given year. Such vagueness and ambiguity makes it impossible for the court to determine whether a claim within the jurisdiction of the United States Court of Federal Claims exists, and certainly does not provide sufficient "factual content that allows the court to draw the reasonable inference that the [Government] is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Accordingly, this claim also must be dismissed. See Twombly, 550 U.S. at 555.

III. CONCLUSION.

For these reasons, the Government's August 23, 2013 Motion To Dismiss is granted. Accordingly, the Clerk of Court is directed to dismiss the April 25, 2013 Complaint.

IT IS SO ORDERED.

Susan G. Braden
Judge

FOOTNOTES:

/1/ Based on the court's review, Plaintiffs have filed at least six different lawsuits challenging their tax liability: (1) Diamond v. United States, 107 Fed. Cl. 702 (2012); (2) Diamond v. C.I.R., No. 003033-12S L (Apr. 17, 2012); (3) Diamond v. C.I.R., No. 13878-12S (T.C. Aug. 28, 2012); (4) Diamond v. C.I.R., No. 005518-12S (T.C. Sept. 28, 2012); (5) Diamond v. C.I.R., No. 014482-10S L (T.C. Sept. 30, 2013); and (6) Diamond v. C.I.R., No. 005516-12S L (T.C. Dec. 19, 2013).

/2/ Hereinafter, the Internal Revenue Code will be cited as "I.R.C."

/3/ The relevant facts discussed herein were derived from: Plaintiffs' April 25, 2013 Complaint ("Compl.") and Exhibits attached thereto ("Pl. Exs. A-C"); the Government's August 23, 2013 Motion To Dismiss and Exhibits attached thereto ("Gov't Mot. Exs. A-B") (certified copies of Mr. Diamond's tax records for years 2005-2011); Plaintiffs' September 3, 2013 Objection To Motion To Dismiss ("Pl. Resp.") and Exhibit attached thereto ("Pl. Resp. Ex. A"); Plaintiffs' October 8, 2013 Sur-Reply To Motion To Dismiss ("Pl. Sur-Reply") and Exhibit attached thereto ("Pl. Sur-Reply Ex. A"); and Plaintiffs' October 28, 2013 Supplement To Sur-Reply ("Pl. Supp.") and Exhibit attached thereto ("Pl. Supp. Ex. A"). None of Plaintiffs' exhibits are numerically paginated. Therefore, the citations herein to particular pages reflect their order within the exhibit.

/4/ The Complaint does not indicate whether the application was for an original social security number or for a replacement.

/5/ The jurat requires a taxpayer to sign the Form 1040 under penalty of perjury. In its unadulterated form, it reads: "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge." Pl. Ex. A at 6.

/6/ The Complaint alleges that this corrected and accepted return was sent within 30 days of the receipt of the August 27 letter. Compl. paragraph 76.

/7/ On November 26, 2010, Plaintiffs filed an amended tax return that also resulted in no additional tax being assessed. Gov't Mot. Ex. A. at A-5.

/8/ Mr. Diamond has a history of being assessed filing penalties under I.R.C. section 6702. For the 2005 tax year, he was assessed two $ 500 penalties and now has an outstanding balance of $ 403.77. Gov't Mot. Ex. B at B-2, B-7. For tax year 2006, Mr. Diamond was assessed two $ 5,000 penalties, and now has an outstanding balance of $ 9,806.26. Gov't Mot. Ex. B at B-9, B-10, B-13. For the 2007 tax year, Mr. Diamond was assessed three $ 5,000 penalties, and now has an outstanding balance of $ 15,076. Gov't Mot. Ex. B at B-15, B-16, B-18.

/9/ Letter 3176, also known as "Response to Frivolous Documents/Returns Received from Taxpayers," informs the taxpayer that the IRS considers a tax return to be frivolous and subject to penalty under I.R.C. section 6702, but "provides the taxpayer an opportunity to withdraw a frivolous return filing." See Internal Revenue Manual, Part 5: Collection Process, http://www.irs.gov/irm/part5/irm_05-020-010.html (last visited Apr. 3, 2014). A CP72 Notice likewise informs the taxpayer that the IRS considers a tax return to be frivolous, when it states a position or provides information that "has no basis in the law." Understanding Your CP72 Notice, http://www.irs.gov/Individuals/Understa ... P72-Notice (last visited Apr. 3, 2014). The CP72 Notice affords the taxpayer thirty days to file a corrected return, but failure to appropriately respond can result in a penalty of $ 5,000 being assessed. Id.

/10/ The Complaint alleges the following amounts are owed for each year:

2006: $ 116.95 (Compl. paragraph 69);

2007: $ 131.49 (Compl. paragraph 80);

2008: $ 192.31 (Compl. paragraph 89);

2009: $ 247.44 (Compl. paragraph 95);

2010: $ 157.50 (Compl. paragraph 100);

2011: $ 36.24 (Compl. paragraph 105).

/11/ See RCFC 12(d) ("If, on a motion under RCFC 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under RCFC 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.").

/12/ RCFC 56(d) provides, in relevant part, that if the party opposing summary judgment "shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition," the court may defer ruling on or deny a motion for summary judgment, or allow additional time to conduct discovery. RCFC 56(d).

/13/ Because the facts discussed above concern the court's subject matter jurisdiction, they may be considered when ruling on the Government's August 23, 2013 Motion To Dismiss. See Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988) ("If a motion to dismiss for lack of subject matter jurisdiction . . . challenges the truth of the jurisdictional facts alleged in the complaint, the [trial] court may consider relevant evidence in order to resolve the factual dispute."); see also Gonzalez v. United States, 284 F.3d 281, 288 (1st Cir. 2002) ("The attachment of exhibits to a Rule 12(b)(1) motion does not convert it to a Rule 56 motion. While the court generally may not consider materials outside the pleadings on a Rule 12(b)(6) motion, it may consider such materials on a Rule 12(b)(1) motion[.]"). The court considers these materials only insofar as they pertain to the Government's arguments for dismissal based on lack of subject matter jurisdiction. See Twp. of Saddle Brook v. United States, 104 Fed. Cl. 101, 106 (2012) (explaining that the court should consider relevant factual evidence to determine if it has subject matter jurisdiction).

/14/ Plaintiffs' contention that they paid $ 60 to challenge the 2008 fee in the United States Tax Court is irrelevant. Pl. 10/23/13 Resp. paragraph 4. First, full payment of any federal tax due is required to be paid prior to commencing suit. See Flora, 357 U.S. at 72-73 ("[R]efund suits [can] only be maintained upon full payment of the tax alleged to be due." (emphasis added)). A single $ 60 payment is not full satisfaction of a $ 5,000 obligation. Second, the $ 60 Plaintiffs paid appears to be the filing fee for commencing a petition in the Tax Court. See United States Tax Court, Fees and Charges (listing the Petition Filing Fee as $ 60.00), http://www.ustaxcourt.gov/fees.htm (last visited Apr. 3, 2014).

/15/ In 1982, Congress relaxed the full payment requirement when it enacted I.R.C. section 6703(c)(1), which permits a taxpayer to contest a penalty imposed under section 6702 by bringing a refund suit after paying only 15 percent of the assessed penalty. See I.R.C. section 6703(c)(1). In addition, a taxpayer is not required to prepay "interest and penalties when the taxpayer only disputes the tax assessment." Shore, 9 F.3d at 1524.

/16/ Plaintiffs also invoke the right against self-incrimination founded in the Fifth Amendment to the United States Constitution. Pl. 10/23/13 Resp. paragraph 4 (citing United States v. Sullivan, 274 U.S. 259, 263 (1927) (holding that the privilege against self-incrimination does not justify an outright refusal to file any income tax return at all)).

/17/ As the Government points out, in two cases with Plaintiffs the United States Tax Court "recently reduced the amount of certain frivolous filing penalties assessed against them for 2005-2007." Gov't Reply 4 (citing Pl. Resp. Ex. A at 17-21). Those decisions reduce those particular penalties to $ 1,000. Gov't Reply 4. That reduction, however, does not entitle Plaintiffs to a refund, since the overpayments at issue here "are still insufficient to cover even the reduced 2005 and 2006 penalty amounts, let alone the $ 5,000 frivolous filing penalty for 2008." Gov't Reply 4.

Post by **The Observer** » Wed Feb 11, 2015 4:26 pm

And the Diamonds strike back! Actually, I should say that they have struck out - again.

NORMAN DOUGLAS DIAMOND,
Plaintiff-Appellant

ZAIDA GOLENA DEL ROSARIO,
Plaintiff
v.
UNITED STATES,
Defendant-Appellee

Release Date: FEBRUARY 10, 2015

NOTE: This disposition is nonprecedential.

UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

Appeal from the United States Court of Federal Claims
in No. 13-cv-0292-SGB,
Judge Susan G. Braden.

Decided: February 10, 2015

NORMAN DOUGLAS DIAMOND, Tokyo, Japan, pro se.

JANET A. BRADLEY, Tax Division,
United States Department of Justice,
Washington, DC, for defendant-appellee.
Also represented by MICHAEL J. HAUNGS, TAMARA W. ASHFORD.

Before PROST, Chief Judge,
MOORE, and O'MALLEY, Circuit Judges.

PER CURIAM.

Norman Douglas Diamond and his wife, Zaida Golena Del Rosario, (collectively, "Appellants"), acting pro se, appeal a decision of the United States Court of Federal Claims dismissing their claim for abatement of a 2008 Internal Revenue Service ("IRS") fee for lack of subject matter jurisdiction, and granting the government's motion for summary judgment that they were not entitled to a tax refund for 2006-2011 tax years. See Diamond v. United States, 115 Fed. Cl. 516 (2014) ("Claims Decision").Because the Court of Federal Claims did not err in its decision, we affirm.

BACKGROUND

Norman Diamond and his wife have been in a protracted dispute with the IRS since the early 1990s, when the IRS sent documents to the Appellants' residence in Japan with Mr. Diamond's Social Security number on the outside of the envelopes. Following this incident, both Mr. Diamond and his wife applied for new Social Security numbers and individual taxpayer identification numbers ("ITINs"). The two have not been issued new Social Security numbers, but received ITINs finally in 2011.

In the interim, Appellants have had several other issues with the IRS regarding their tax returns. For example, the IRS fined Appellants several times for filing frivolous tax returns under 26 U.S.C. section 6702, including a $ 5,000 fee for filing a frivolous income tax return in 2008. Appellants challenged this assessment in 2011, but the IRS denied the request to abate the fee because Appellants had failed to timely challenge it. Appellants then protested this penalty by filing a petition in the United States Tax Court ("Tax Court"), but the Tax Court dismissed their petition for lack of subject matter jurisdiction in 2012. Because they contest the propriety of these fines and have yet to pay the penalties in full, Appellants continue to have outstanding tax liabilities.

Despite these troubles, for the 2006-2011 tax years, Appellants actually overpaid a total of $ 881.93 in federal taxes: $ 116.95 for 2006; $ 131.49 for 2007; $ 192.31 for 2008; $ 274.44 for 2009; $ 157.50 for 2010; and $ 36.24 for 2011. See Claims Decision, 115 Fed. Cl. at 522 n.10. Rather than issue a refund, however, the IRS applied these overpayments to Appellants' outstanding liabilities.

In light of the Tax Court's decision to dismiss their 2008 abatement claim and the IRS's decision not to issue a refund for their overpayments, Appellants filed a complaint in the Court of Federal Claims, seeking an abatement of the penalty assessed for the frivolous 2008 tax return and a refund for their 2006-2011 tax years. Appellants contended that they were entitled to $ 881.93 in refunds for the 2006-2011 tax years and also argued that the government had incorrectly determined that the 2008 tax return was frivolous and requested an abatement of the $ 5,000 penalty. The government filed a motion to dismiss, arguing that the Court of Federal Claims lacked jurisdiction over the 2008 abatement claim and that Appellants were not entitled to a refund because the overpayments had been properly applied to other outstanding IRS debts.

Upon review of the motions, the Court of Federal Claims found in favor of the government on both issues. Claims Decision, 115 Fed. Cl. at 526, 530. It first explained that it only has jurisdiction over tax refund cases where a party pays the entire disputed assessment. Because Appellants had failed to pay the entire penalty before bringing suit, it could not exercise jurisdiction over the 2008 abatement claim. Id. at 526. Regarding the refund claim, because the parties heavily relied on matters outside the pleadings, the Court of Federal Claims construed the government's motion to dismiss as a motion for summary judgment, and granted the motion, finding that Appellants were not entitled to a refund. Id. at 522, 530. The court explained that because it was within the IRS's authority to apply overpayments to other outstanding liabilities, the IRS's decision to apply $ 881.93 to Appellants' unpaid penalties was permissible. Accordingly, the court concluded that Appellants were not entitled to any relief and entered judgment in favor of the government.

Appellants timely appealed the Court of Federal Claims' decision to this court. We have jurisdiction pursuant to 28 U.S.C. section 1295(a)(3).

DISCUSSION

On appeal, Appellants seek clarification as to whether any court has jurisdiction over their 2008 abatement claim. Appellants also contest the Court of Federal Claims' decision to exercise jurisdiction over their 2006-2011 refund claims, even though neither party questioned the court's ability to consider these claims below.

We review a Court of Federal Claims' dismissal for lack of jurisdiction de novo. Banks v. United States, 741 F.3d 1268, 1275 (Fed. Cir. 2014). We also review a grant of summary judgment de novo. Century Exploration New Orleans, LLC v. United States, 745 F.3d 1168, 1171 (Fed.Cir. 2014). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

A. 2008 Abatement Claim

The Court of Federal Claims, concurrently with the United States District Courts, has jurisdiction over tax refund suits. See 28 U.S.C. section 1346(a)(1), 1491(a)(1). But a prerequisite to bringing such a claim in the Court of Federal Claims is full payment of the assessed taxes. Flora v. United States, 362 U.S. 145, 177 (1960) (finding that the proper construction of 28 U.S.C. section 1346(a)(1) "require[d] full payment of an assessment before an income tax refund suit [could] be maintained"); Ledford v. United States, 297 F.3d 1378, 1382 (Fed. Cir. 2002) (affirming a dismissal of a tax refund case because the assessed tax had not been paid). This rule also applies when a taxpayer is protesting a penalty imposed under 26 U.S.C. section 6702 by the IRS. 1 Accordingly, the Court of Federal Claims lacks jurisdiction to consider a refund claim for an assessment made pursuant to section 6702, if the taxpayer does not pay the entire amount of the assessment.

On appeal, Appellants question whether any court can consider its 2008 abatement claim, given that both the Court of Federal Claims and the Tax Court dismissed claims relating to that question for lack of subject matter jurisdiction. See Claims Decision, 115 Fed. Cl. at 522.

Typically, a taxpayer can challenge an assessment in one of two ways. The first is to file a petition with the Tax Court without paying the assessment, and the second is to pay the assessment, request a refund from the IRS, and then file a refund suit in the Court of Federal Claims or in the district court. See 26 U.S.C. section 7422(a); Smith v. United States, 495 F. App'x 44, 48 (Fed. Cir. 2012) (explaining how a taxpayer can dispute an income tax assessment in the Tax Court or the Court of Federal Claims).

In this case, Appellants first filed a petition in the Tax Court regarding their 2008 fee, and then subsequently filed a complaint in the Court of Federal Claims after the Tax Court dismissed their petition. Appellants are correct that both courts dismissed their claim for lack of subject matter jurisdiction, but neither court stated it could never consider the claim. Rather, in both instances, Appellants failed to comply with certain prerequisites to the exercise of jurisdiction in those courts. The Tax Court dismissed Appellants' 2008 abatement claim because Appellants failed to provide an IRS notice sufficient to confer jurisdiction upon the court and the Court of Federal Claims dismissed this same claim because Appellants did not pay the disputed penalty in full. 2 See Diamond v. Comm'r, No. 13878-12S (T.C. Aug. 28, 2012); Claims Decision, 115 Fed. Cl. at 526.

In order to bring a claim in either venue, Appellants had to comply with all governing prerequisites to doing so. See Rochelle v. Comm'r, 116 T.C. 356, 358 (2001) ("There are two prerequisites to this Court's jurisdiction to redetermine a deficiency: (1) The issuance of a valid notice of deficiency by the Commissioner; and (2) the timely filing of a petition with the Court by the taxpayer."); Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993) (holding that a tax refund claim must be dismissed if the "principal tax deficiency has not been paid in full"); see also Brach v. United States, 443 F. App'x. 543, 545(Fed. Cir. 2011) (explaining that full payment of an assessment was a "jurisdictional prerequisite to suing for a refund suit."); Chi. Milwaukee Corp. v. United States, 40 F.3d 373, 374 (Fed. Cir. 1994) (finding that 26 U.S.C. section 7422(a) "imposes, as a jurisdictional prerequisite to a refund suit, filing a refund claim with the IRS that complies with IRS regulations"). In the case of the Court of Federal Claims, this includes full payment of the challenged assessment.

In the present case, the Court of Federal Claims found that there was no allegation and no proof that Appellants had paid the entire 2008 penalty assessment. See Claims Decision, 115 Fed. Cl. at 525-26. Because Appellants failed to pay the full 2008 assessment, the Court of Federal Claims concluded it did not have jurisdiction to consider this claim. See Schell v. United States, 589 F.3d 1378, 1381 (Fed. Cir. 2009) ("As the party seeking the exercise of jurisdiction, the Taxpayers have the burden of establishing that jurisdiction exists."). As there was no evidence that Appellants paid the entire fee, the Court of Federal Claims correctly determined that it lacked jurisdiction to consider the Appellants' 2008 abatement claim. Accordingly, the Court of Federal Claims did not err when it dismissed this portion of Appellants' complaint for lack of jurisdiction.

B. Tax Refund Claims for 2006-2011

For the first time on appeal Appellants question whether the Court of Federal Claims had jurisdiction over their refund claims for the 2006-2011 tax years. They allege that this court's decision in a case concerning Appellants' 2005 tax return, Diamond v. United States, 530 F. App'x 943 (2013), deprived the Court of Federal Claims of jurisdiction over the Appellants' 2006-2011 tax returns. In the prior case, the Court of Federal Claims determined that Appellants' 2005 tax return did not contain sufficient information, did not evince an honest endeavor to satisfy the law, and therefore did not constitute a proper claim for a refund. Because it only has jurisdiction over a refund claim if "the taxpayers' submissions to the IRS constitute a claim for refund," the Court of Federal Claims dismissed Appellants' refund claim for the 2005 tax year. Diamond, 530 F. App'x at 944 (quoting Waltner v. United States, 679 F.3d 1329, 1333 (Fed. Cir.2009)). On appeal, this court affirmed, agreeing with the Court of Federal Claims' determination that Appellants' 2005 tax return was not a proper claim for a refund. Id.

Here, Appellants allege that the same deficiencies found in their 2005 tax return are present in the returns at issue in this case. Therefore, Appellants contend that the Court of Federal Claims could not have exercised jurisdiction, because such returns were not valid claims for refunds. At the Court of Federal Claims, Appellants only contested the IRS's decision to credit their overpayments to other outstanding liabilities. As a general principle, appellate courts do not consider issues that were not clearly raised in the proceeding below. Hormel v. Helvering, 312 U.S. 552, 556 (1941); see San Carlos Apache Tribe v. United States, 639 F.3d 1346, 1355 (Fed.Cir. 2011) ("Because the [litigant] did not raise this argument before the Court of Federal Claims, it is waived on appeal."). "Only rarely will an appellate court entertain" a novel argument raised for the first time on appeal. Karuck Tribe v. Ammon, 209 F.3d 1366, 1379 (Fed. Cir.2000); see Singleton v. Wulff, 428 U.S. 106, 121 (1976) ("The matter of what questions may be taken up and resolved for the first time on appeal is one left primarily to the discretion of the courts of appeals, to be exercised on the facts of individuals case."). Because Appellants failed to raise this issue below, they have waived it.

Even if Appellants had made this argument to the Court of Federal Claims, it is meritless. In the case concerning their 2005 tax return, the IRS never accepted a return from Appellants. See Diamond, 530 F. App'x at 944 (explaining that before Appellants filed suit against the government in the Court of Federal Claims for a refund, the IRS had asked Appellants twice to provide additional information so that the IRS could process the return, but Appellants had failed to do so). But, for the years in dispute in this case, the IRS eventually did accept all of Appellants' tax returns, finding that any deficiencies in the original returns had been corrected in subsequent amended returns. Therefore, the concerns raised in the prior case are not at issue here.

Regarding the legality of the IRS's decision to apply Appellants' overpayments to their outstanding tax liabilities for other years, the Court of Federal Claims correctly concluded that the IRS has the authority to do so. See 26 U.S.C. section 6402(a) ("In the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment ...."); General Elec. Co. v. United States, 384 F.3d 1307, 1312 (Fed. Cir. 2004) (explaining that the IRS has the ability to credit overpayments "against the liability of the person who made the overpayment"). Because this was the only issue disputed by the parties below, the Court of Federal Claims properly determined that Appellants had "received the benefit of the refund they [sought]" and "[a]s such, the court can afford them no further relief." Claims Decision, 115 Fed. Cl. at 528. As there were no other issues concerning the Appellants' refund claims, the Court of Federal Claims did not err in granting summary judgment in favor of the government.

CONCLUSION

Accordingly, we affirm the Court of Federal Claims' decision dismissing Appellants' 2008 abatement claim for lack of jurisdiction, and granting the government's motion for summary judgment that Appellants were not entitled to a refund for the tax years 2006-2011.

AFFIRMED

FOOTNOTES:

/1/ Unlike Section 6702 penalties, penalties assessed under Section 6700 or 6701 do not require full payment. Rather, a taxpayer can contest a penalty assessment under these sections by paying only 15% of the fine. 26 U.S.C. section 6703(c) (requiring the taxpayer to pay at least 15% of any penalty imposed under sections 6700 or 6701, and to file a claim seeking a refund of the amounts paid, before filing a suit in district court); see Nielsen v. United States, 976 F.2d 951, 954 n.7 (5th Cir. 1992) ("Section 6703 provides an exception to the general rule that the entire amount of the assessment must be paid up front. Under Section 6703 the taxpayer may contest section 6700 and 6701 penalties by paying only 15% of the assessment and filing a refund suit in federal district court.").

/2/ The propriety of the dismissal by the Tax Court is not before us.

. · Post by . » Wed Feb 11, 2015 8:11 pm

Classic. Start with trivial amounts of tax due.

Add a decade of ignorant administrative arguments and ridiculous legal actions.

Run up thousands in frivolous filing IRS penalties while litigating pro se.

Lose abjectly.

What more could a TP ask for?

Post by **LPC** » Tue Apr 28, 2015 11:00 am

Cert. denied. No. 14-1181 (U.S.S.C. 4/27/2015)

Quatloos!

TPs Friv Their Way With Form 2555 Exclusion

TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion

Re: TPs Friv Their Way With Form 2555 Exclusion