Quinn v. United States

TIMOTHY QUINN, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.

No. 20-CV-3261 (KMK)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

February 25, 2021

OPINION & ORDER

Appearances

Kyle A. Seiss

Cohen LeBarbera & Landrigan LLP

Chester, NY

Counsel for Plaintiff

Rachael L. Doud

U.S. Attorney's Office, SDNY

New York, NY

Counsel for Defendant

KENNETH M. KARAS, United States District Judge:

Timothy Quinn ("Plaintiff") brings this Action against the United States of America ("Defendant" or the "Government") under 26 U.S.C. § 7422, seeking to recover $22,274.00 in federal income taxes that he paid to the Government in error. (Compl. ¶¶ 1, 10-11 (Dkt. No. 1).) Before the Court is the Government's Motion To Dismiss this Action for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), (see Not. of Mot. (Dkt. No. 15)), or, in the alternative, for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), (see Mem. of Law in Supp. of Gov't's Mot. To Dismiss ("Gov't's Mem.") 7-8 (Dkt. No. 16); Reply Mem. of Law in Further Supp. of Mot. To Dismiss ("Gov't's Reply") 1, 6 (Dkt. No. 20)). For the following reasons, the Motion is granted.

I. Background

A. Factual Background

The following facts are drawn from Plaintiff's Complaint and are taken as true for the purposes of resolving the instant Motion.

Plaintiff is a former sergeant in the New York City Police Department. (Compl. ¶ 6.) After the terrorist attacks of September 11, 2001, Plaintiff was assigned to search for human remains and personal effects among the wreckage from the attacks at the Fresh Kills Landfill in Richmond County, New York. (Id.) Plaintiff alleges that the terrorist attacks and his involvement in the subsequent recovery work caused him to develop several serious and debilitating ailments, such as post-traumatic stress disorder, reactive airway disease, anxiety, cardiomyopathy, fatigue, jitteriness, lack of concentration, and memory issues. (Id. ¶ 7.)

As a result of his medical conditions, Plaintiff was deemed eligible for Social Security Disability Insurance ("SSDI") benefits in 2010. (Id. ¶ 8.) But because Plaintiff allegedly had become "incapacitated and financially disabled," he did not realize "that, pursuant to the Tax Relief for Victims of Terrorist Attacks of 2001," he did not have to include such benefit payments as income on his tax returns. (Id. ¶ 9.)¹ Accordingly, Plaintiff avers that in 2010 he paid $22,274.00 in taxes that were not owed to the Government. (Id. ¶¶ 10-11.) In his Complaint, Plaintiff states that once his financial representative identified this mistake, Plaintiff "swiftly" sought to correct this mistake by amending his 2010 tax return through the filing of an Internal Revenue Service ("IRS") Form 1040-X (the "Refund Claim" or the "Claim"). (Id. ¶ 12; see also id. ¶ 23 (alleging that he "timely filed his 2010 amended federal tax return").) TheComplaint, however, is silent as to when Plaintiff filed his Refund Claim, nor does it specify the basis on which the IRS eventually denied the Claim, simply noting that, "[n]otwithstanding the foregoing, the IRS has failed to refund the Plaintiff's overpayment." (Id. ¶ 14.)

Plaintiff now brings this Action pursuant to 26 U.S.C. § 7422, alleging that the IRS "wrongly denied" his amended tax return and "wrongfully refused to refund [his] overpayment of $22,274.00" in federal taxes. (Id. ¶¶ 1, 24.) Plaintiff argues that his Action is timely pursuant to 26 U.S.C. § 6511(h), which provides that the two-year limitations period in which a taxpayer must file a tax refund claim "shall be suspended" during any period in which a taxpayer is "financially disabled," meaning the taxpayer "is unable to manage his financial affairs by reason of a medically determinable physical or mental impairment . . . which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." 26 U.S.C. § 6511(h)(1), (2)(a). (See Compl. ¶¶ 15-16.)² Plaintiff alleges that he "was incapacitated and financially disabled at all relevant times." (Id. ¶ 17.) In addition, although § 6511 states that "[a]n individual shall not be treated as financially disabled during any period that such individual's spouse . . . is authorized to act on [his] behalf . . . in financial matters[,]" 26 U.S.C. § 6511(h)(2)(B), Plaintiff avers that "no other individual had the authority to act on [his] behalf regarding [such] matters during [his] period of financial disability," (Compl. ¶ 19).

B. Procedural History

After Plaintiff filed his Complaint on April 24, 2020, (see Dkt. No. 1), the Government filed a pre-motion letter on July 6, 2020 (the "Government's Pre-Motion Letter") outlining itsanticipated motion to dismiss Plaintiff's Complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, (see Letter from Rachael L. Doud, Esq., to Court (July 6, 2020) ("Gov't's Pre-Mot. Letter") 1 (Dkt. No. 7)). Plaintiff submitted a Pre-Motion Response on July 16, 2020, (see Letter from Kyle A. Seiss, Esq., to Court (July 16, 2020) ("Pl.'s Pre-Mot. Resp.") 1 (Dkt. No. 11)), and the Government filed its Pre-Motion Reply on July 24, 2020, (see Letter from Rachael L. Doud, Esq., to Court (July 24, 2020) ("Gov't's Pre-Mot. Reply") 1 (Dkt. No. 13)). Taken together, these pre-motion submissions provide a more comprehensive picture of the factual background in this case.

The Court learned, for example, that Plaintiff filed his Refund Claim on March 30, 2015. (Gov't's Pre-Mot. Letter 1; Gov't's Pre-Mot. Letter Ex. A ("2015 Denial Letter"), at 2 (Dkt. No. 7-1).)³ The IRS denied Plaintiff's Refund Claim by letter dated August 28, 2015 (the "2015 Denial Letter"), which noted that "[a] claim must be filed within 3 years from the time the return was filed." (Gov't's Pre-Mot. Letter 1; 2015 Denial Letter 2.) In addition to outlining the process for appealing the IRS's decision, the letter also stated:

If you do not agree with our decision, you can file suit to recover tax, penalties, or other amounts, with the United States District Court having jurisdiction or with the United States Court of Federal Claims. . . . The law permits you to do this within 2 years from the date of this letter. If you decide to appeal our decision first, the 2-year period still begins from the date of this letter.

(Gov't's Pre-Mot. Letter 1 (emphasis added) (quoting 2015 Denial Letter 5).)

After the IRS denied Plaintiff's Refund Claim, a registered tax preparer filed an appeal on behalf of Plaintiff and his wife on September 22, 2015 (the "Refund Claim Appeal"). (Gov't's Pre-Mot. Letter 1-2; Gov't's Pre-Mot. Letter Ex. B ("Refund Claim Appeal"), at 2(Dkt. No. 7-2).) On June 3, 2016, an attorney representing Plaintiff submitted a letter on his behalf requesting that the IRS find the Refund Claim timely pursuant to 26 U.S.C. § 6511(h), which, as noted, suspends the relevant limitations period for taxpayers who are financially disabled. (Gov't's Pre-Mot. Letter 2; Gov't's Pre-Mot. Letter Ex. C ("Financial Disability Request"), at 9 (Dkt. No. 7-3).) Attached to this submission was a letter from Plaintiff, dated February 29, 2016 and addressed to an appeals officer at the IRS (the "February 2016 Letter"), which stated: "I am writing to you regarding my wife's role as caregiver and financial adviser to me. Since my illness, Catherine Quinn has been managing my finances starting Dec[ember] 2002 to the present. At no time did we fill out [a] Power of Attorney on my behalf." (Financial Disability Request 14; see also Gov't's Pre-Mot. Letter 2.) The IRS denied Plaintiff's Refund Claim Appeal on November 28, 2016. (See Gov't's Pre-Mot. Reply 2; Decl. of Rachael L. Doud in Supp. of Gov't's Mot. To Dismiss ("Doud Decl.") Ex. D ("First Appeal Denial"), at 2 (Dkt. Nos. 17, 17-4).)

Plaintiff filed another appeal in January 2020. (Gov't's Pre-Mot. Reply 2.) In response to the IRS's request for additional information regarding his wife's involvement in his financial affairs, Plaintiff submitted a letter, dated March 31, 2020 (the "March 2020 Letter"), stating that his wife—whom he describes as a "spendthrift"—"has no financial education or background" and "ha[s] never [been] entrusted . . . to handle [his] . . . financial affairs," (see Gov't's Pre-Mot. Letter 2; Compl. Ex. B, at 3 (Dkt. No. 1-2)), seemingly contradicting his previous assertion that his wife "ha[d] been managing [his] finances" since December 2002, (see Financial Disability Request 14). The IRS denied Plaintiff's second appeal on May 12, 2020. (Gov't's Pre-Mot. Reply 2; Gov't's Pre-Mot. Letter Ex. D ("Second Appeal Denial"), at 3 (Dkt. No. 7-4).) Plaintiffhas not disputed any of the Government's factual assertions regarding the timeline of his appeals and their subsequent resolution.

The Government argued in its Pre-Motion Letter that Plaintiff's Complaint should be dismissed as untimely pursuant to Rule 12(b)(1). (Gov't's Pre-Mot. Letter 2-3.) The Government observed that under 26 U.S.C. § 6532(a)(1), the limitations period for filing a tax refund suit under 26 U.S.C. § 7422 "expires two years after the IRS mails the taxpayer, by certified or registered mail, a notice of disallowance of the claim for refund." (Id. at 2.) As noted, the IRS's 2015 Denial Letter stated as much, and further advised Plaintiff that an appeal of the IRS's denial of a refund claim does not extend this two-year limitations period. (See 2015 Denial Letter 5; see also Gov't's Pre-Mot. Letter 2 (noting that "any consideration, reconsideration, or action by the [IRS] with respect to [a refund] claim following the mailing of a notice by certified mail or registered mail of disallowance shall not operate to extend the period within which suit may be begun" (first alteration in original) (quoting 26 U.S.C. § 6532(a)(4))).) Although the IRS denied Plaintiff's Refund Claim on August 28, 2015, the Government noted that the instant Action...