Jolly v. United States

1

MAKETA S. JOLLY, Plaintiff, v. THE UNITED STATES, Defendant.

No. 20-412

United States Court of Federal Claims

August 23, 2023

NOT FOR PUBLICATION

OPINION AND ORDER

RYAN T. HOLTE, JUDGE

This Opinion and Order constitutes the Court's third attempt to discern jurisdiction over plaintiff's tax refund claims. Plaintiff first filed a petition to the United States Tax Court on 17 September 2019 regarding her 2016 through 2018 tax returns. The Tax Court dismissed plaintiff's claims in March 2020 finding it lacked subject-matter jurisdiction and the statute of limitations had run. In April 2020, plaintiff filed a complaint in this court seeking $5,680.00 for tax years 2016 through 2019. The government filed a motion to dismiss in December 2020. In a May 2021 order denying the government's Motion to Dismiss, two material factual disputes stemming from the IRS's inability to locate plaintiff's 2017 administrative file prevented the Court from determining whether plaintiff fully paid the tax liabilities: (1) the existence of a 2017 notice of deficiency; and (2) plaintiff's receipt of a $6,863.00 2017 tax refund. In April 2022, the government changed argument to conclude the IRS followed regulatory procedure when it did not issue a 2017 notice of deficiency and, in September 2022, the government confirmed plaintiff received a $6,863.00 refund for tax year 2017. In March 2023, the Court ordered plaintiff to identify: (1) how the receipt of the $6,863.00 refund does not change or negate plaintiff's claim she fully paid the 2017 tax liabilities; and (2) what specific monies the government still owes plaintiff and what money-mandating law is invoked if plaintiff continues the original claims. After full briefing from the parties, for the reasons discussed below the Court finds it now lacks jurisdiction over plaintiff's claims regarding tax years 2016 through 2019 and must therefore dismiss this case pursuant to Rules 12(h)(3) and 12(b)(6) of the Rules of the Court of Federal Claims.

I. Background

On 6 April 2020, plaintiff filed a complaint seeking individual income tax returns totaling $5,680.00 for tax years 2016 through 2019. Compl. at ¶ 4, ECF No. 1. The factual record presented by the parties at the time of the Court's 3 March 2023 Order considering the government's Motion for Reconsideration summarizes:

Ms. Jolly timely filed her individual income tax returns for 2016 and received the requested refund of $2,392.00 on 23 February 2017. In 2018, Ms. Jolly filed an amended tax return for 2016. The IRS audited Ms. Jolly's tax record and issued a notice of deficiency on 8 April 2019, resulting in a $1,965.00 increase in Ms. Jolly's 2016 tax liability. The notice advised Ms. Jolly the deadline to petition the Tax Court regarding the adjustments was 8 July 2019. Ms. Jolly did not pay the amount she allegedly owed for 2016, which was assessed to be $2,184.81 as of 5 October 2020.

Ms. Jolly timely filed her tax return for 2017 and received the requested refund of $6,863.00 on 14 March 2018. In 2018 Ms. Jolly filed an amended tax return for 2017. According to the government, on 9 July 2018, the IRS assessed a total of $6,371.16 in Ms. Jolly's tax liability. The government could not locate any notice of deficiency the IRS issued to Ms. Jolly for the assessment of her 2017 tax liability.

On 17 September 2019, Ms. Jolly filed a petition with the United States Tax Court regarding tax years 2016 through 2018. The Tax Court dismissed Ms. Jolly's 2016 claim, as Ms. Jolly failed to timely file the petition within 90 days of receiving the 2016 notice of deficiency. The Tax Court also dismissed Ms. Jolly's 2017 and 2018 claims for lack of jurisdiction, because "the jurisdiction of the [Tax] Court depends, in part, on the issuance by the Commissioner of a valid notice of deficiency to the taxpayer," yet "no notice of deficiency was issued to petitioner for tax years 2017 and 2018. . . ."

Ms. Jolly timely filed her tax returns for 2018 and 2019. For both years, the IRS applied Ms. Jolly's tax refund to her 2017 balance ($1,947.00 and $1,255.00, respectively). Ms Jolly's total amount of additional taxes due for 2017 after the application of refund credits from 2018 and 2019, was assessed to be $2,069.20 as of 5 October 2020, which Ms. Jolly did not pay.

3 Mar. 2023 Order at 2, ECF No. 51 (quoting 20 May 2021 Order at 2-3, ECF No. 18) (internal citations omitted). The Court denied the government's Motion to Dismiss in its 20 May 2021 Order because two material factual disputes, both dispositive of jurisdiction, arose:

First, the parties disputed whether the IRS had issued a notice of deficiency to plaintiff for the 2017 tax year. Plaintiff argued a notice of deficiency had not been issued when one was required for the assessed 2017 deficiency. The government countered the notice was "missing," but presumably existed, so the deficiency assessment was valid. If a notice of deficiency had not been validly issued when a notice was required, then the liability assessed in the notice of deficiency would be void, and plaintiff would have been paid in full. If plaintiff was paid in full, this court has jurisdiction. Plaintiff would have been paid in full for the 2017 tax year because the $6,298.00 deficiency would not be treated as a liability on plaintiff's account given that a required notice of deficiency was never issued by the IRS.

Second, the parties disputed whether the IRS had issued the $6,863.00 refund from plaintiff's initial 2017 tax return filing. Plaintiff argued she never received the $6,863.00 refund from her initial 2017 tax return filing. The government maintained plaintiff received the $6,863.00 refund. Prior to 20 May 2021, the government had not yet obtained plaintiff's 2017 IRS administrative file, nor had the government conducted the trace on the $6,863.00 refund to confirm plaintiff's receipt. If the 2017 refund of $6,863.00 had never been issued to plaintiff, the calculations from the 2018 and 2019 refunds credited against the 2016 deficiency show plaintiff was paid in full and owed a refund.

Id. at 2-3 (internal citations omitted); 20 May 2021 Order at 8. The factual record preceding the 3 March 2023 Order continues:

On 17 June 2021, the government filed a motion for reconsideration of the 20 May 2021 Order denying the government's motion to dismiss. To aid in the Court's consideration of the motion for reconsideration, the Court ordered supplemental briefing from the parties regarding the existence of a 2017 notice of deficiency and the Flora full payment rule.^[1] On 5 August 2021, the government filed its opening supplemental brief. Plaintiff responded on 3 September 2021, and the government replied on 15 September 2021. The parties then convened for a status conference on 18 November 2021. Plaintiff, originally pro se, obtained representation on 3 January 2022, and the parties filed a joint status report providing for plaintiff's further supplemental briefing on 28 January 2022. Plaintiff filed supplemental briefing on the government's motion for reconsideration on 15 March 2022.

The parties convened for a second status conference on 30 June 2022. "During the status conference, plaintiff disputed she received a $6,863.00 tax refund payment the government contends it paid her on 14 March 2018." On 30 June 2022, the Court ordered this case "stayed while the government and plaintiff collaborate to conduct a tax refund trace." Subsequently, on 30 September 2022, "the IRS provided the results of a refund trace showing" $6,863.00 was indeed deposited 14 March 2018. Plaintiff later stipulated to the receipt of the $6,863.00 refund from her initial 2017 tax return on 14 October 2022 in a status report, as confirmed by the trace conducted by the government.

On 26 October 2022, after the parties confirmed issuance and receipt of the $6,863.00 refund, the Court lifted the stay, agreed to plaintiff's request to file supplemental briefing on the government's motion for reconsideration, and the government's request to file a response to plaintiff. In accord with the order, the government submitted its supplemental briefing on 6 December 2022, while plaintiff waived filing any supplemental briefing in a status report filed on 7 December 2022. The parties convened for a third status conference on 11 January 2023. Following this status conference, on 12 January 2023, the Court ordered: (1) the parties confer with regards to the effect of the confirmed and undisputed $6,863.00 on plaintiff's claims and the government's motion for reconsideration; and (2) plaintiff file a supplemental statement to provide any updates to the position of her claims. Plaintiff filed a status report on 1 February 2023 broadly alleging "further monies and damages" without any specific detail.

3 Mar. 2023 Order at 4-5 (internal citations omitted). In its Order, the Court first considered whether it should grant the government's Motion for Reconsideration. Id. at 5. Ultimately, the Court denied the government's Motion for Reconsideration because the facts needed to resolve each material factual dispute "could have been discovered by the exercise of due diligence prior to the May 2021 Order." Id. at 7 (citing Girault v. United States, 133 Ct. Cl. 135, 140 (1955)). Additionally, the Court "did not (1) patently misunderstand a party, (2) make a decision outside of the adversarial issues presented by the parties, or (3) err in apprehension." Id. at 6 (citing Del. Valley Floral Grp. v. Shaw Rose Nets, LLC., 597 F.3d 1374, 1384 (quoting Ass'n for Disabled Ams., Inc. v. Amoco Oil Co., 211 F.R.D. 457, 477 (S.D. Fla. 2002))) (internal quotations omitted).

The Court concluded its 3 March 2023 Order by considering whether plaintiff had alleged facts to sustain a claim and...