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Khafra v. Internal Revenue Service

United States District Court, D. Maryland

November 6, 2018

DIA KHAFRA, et al. Plaintiffs,
v.
INTERNAL REVENUE SERVICE, et al., Defendants.

          MEMORANDUM OPINION

          Paula Xinis, United States District Judge.

         Plaintiffs Dia Khafra and Claudia Lystra Khafra, proceeding pro se, bring suit against the Internal Revenue Service (“IRS”) and Appeals Team Manager Maureen A. Higgins. ECF No. 1. Now pending before the Court are Plaintiffs' Motion to Amend the Complaint and the United States' Motion to Dismiss Plaintiffs' Complaint for lack of subject matter jurisdiction and failure to state a claim. ECF No. 7. The motions are fully briefed and no hearing is necessary. See Local Rule 105.6. For the reasons that follow, the Court grants Plaintiffs' Motion to Amend the Complaint as well as the United States' Motion to Dismiss for lack of subject matter jurisdiction.

         Plaintiffs allege that they are entitled to a refund of taxes paid on April 15, 2012, for the 2011 tax year because the IRS wrongfully denied their refund claim filed on April 16, 2015. ECF No. 1. The United States contends that the Court lacks jurisdiction under 28 U.S.C. § 1346(a)(1) to hear the claim because Plaintiffs filed their refund claim too late to recover for their 2011 taxes. ECF No. 7.[1] For the following reasons, the Court agrees with the United States.

         I. Standard of Review

         Because Plaintiffs are proceeding pro se, the Court construes the Complaint liberally to ensure that potentially meritorious claims survive challenge. See Hughes v. Rowe, 449 U.S. 5, 9 (1980). However, the Court cannot ignore a pro se plaintiff's clear failure to allege facts setting forth a cognizable claim. See Weller v. Dep't of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990) (“The ‘special judicial solicitude' with which a district court should view such pro se complaints does not transform the court into an advocate. Only those questions which are squarely presented to a court may properly be addressed.”). A court, when reviewing pro se complaints, must not abdicate its “legitimate advisory role” to become an “advocate seeking out the strongest arguments and most successful strategies for a party.” Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (1985).

         Motions to dismiss for lack of subject matter jurisdiction challenge a court's authority to hear a matter. See Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005). The plaintiff bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence. Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999). If “a claim fails to allege facts upon which the court may base jurisdiction, ” the court must dismiss the action for lack of subject matter jurisdiction. Davis, 367 F.Supp.2d at 799. In determining whether jurisdiction exists, “the court may look beyond the pleadings and the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue.” Khoury v. Meserve, 268 F.Supp.2d 600, 606 (D. Md. 2003) (quoting Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir. 1993)) (internal quotation marks omitted). Where the defendant contends that the complaint “simply fails to allege facts upon which subject matter jurisdiction can be based, ” the Court construes the facts alleged in the complaint as true and most favorably to the plaintiff. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).

         II. Analysis

         For tax matters generally, 28 U.S.C. § 1346(a)(1) confers original jurisdiction on federal district courts, “concurrent with the United States Court of Federal Claims, ” for “any internal-revenue tax alleged to have been erroneously or illegally assessed or collected.” However, a refund suit[2] may not be filed “until a claim for refund or credit has been duly filed” with the IRS. 26 U.S.C. § 7422(a).[3] For a refund claim to be duly filed, it must comply with the timing provisions of § 6511(a) and (b). United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 8 (2008); Webb v. United States, 66 F.3d 691, 693 (4th Cir. 1995).

         Section 6511(a) provides that where the taxpayer seeks “credit or refund of an overpayment of any tax imposed, ” the claim “shall be filed by the taxpayer within 3 years from the time the return was filed.” Id. Here, Plaintiffs mailed their joint tax return on April 16, 2015. ECF No. 7-1 at 5. Importantly, the Code of Federal Regulations provides that a properly executed individual tax return shall also be construed as a claim for a refund when the return discloses an overpayment. 26 C.F.R. § 301.6402-3(a)(5). Plaintiffs' tax return thus also constituted a refund claim. As the United States acknowledges, the simultaneous filing of Plaintiffs' return and refund claim meets the timing requirements of § 6511(a). See ECF No. 7-1 at 5.

         Section 6511(b) limits the amount that a claimant can recover as follows:

[i]f the claim was filed by the taxpayer during the 3-year period prescribed in subsection (a), the amount of the credit or refund shall not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return.

26 U.S.C. § 6511(b)(2)(A) (emphasis added). For purposes of § 6511, when taxes are deducted and withheld during the calendar year, the taxes are deemed paid on April 15 of the following year. 26 U.S.C. § 6513(b)(1); Rev. Ruling 2003-1 C.B. 814.

         The United States contends that this Court lacks jurisdiction because Plaintiffs filed their refund claim more than three years after paying the taxes in question. ECF No. 7-1 at 6. Plaintiffs' 2011 taxes were deemed paid on April 15, 2012, and the return was not mailed until April 16, 2015.[4] Id. Thus, the United States contends that the taxes were paid one day outside the look-back period provided under § 6511(b), barring Plaintiffs' recovery.

         Plaintiffs respond that the look-back period was augmented by an “extension of time for filing the return.” See ยง 6511(b)(2)(A). Plaintiffs more specifically contend that because the initial due date for filing the return, April 15, 2012, was a Sunday, and April 16, 2012, was a legal holiday, the return was in fact due on April 17, 2012. Thus, say Plaintiffs, by virtue of that extension, the correctly calculated look-back period is between April 16, 2015 and April 15, 2012. ECF No. 11 at 5. This enlarged ...


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