Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-05024/USCOURTS-ca13-15-05024-0/pdf.json

Parties Involved:
Christopher J. McNaughton
Appellant
Judith I. McNaughton
Appellant
United States
Appellee

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

CHRISTOPHER J. MCNAUGHTON, 

JUDITH I. MCNAUGHTON,

Plaintiffs-Appellants

v.

UNITED STATES,

Defendant-Appellee

______________________ 

2015-5024

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 1:13-cv-00288-NBF, Judge Nancy B. Firestone. 

______________________ 

Decided: May 13, 2015 

______________________ 

CHRISTOPHER J. MCNAUGHTON, Scottsdale, AZ, pro se.

JUDITH I. MCNAUGHTON, Scottsdale, AZ, pro se.

JOHN A. NOLET, Tax Division, United States Department of Justice, Washington, DC, for defendant-appellee. 

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2 MCNAUGHTON v. US

Also represented by RICHARD FARBER, CAROLINE D.

CIRAOLO. 

______________________ 

Before PROST, Chief Judge, BRYSON, and DYK, Circuit 

Judges.

DYK, Circuit Judge.

Judith I. and Christopher J. McNaughton (collectively, “the McNaughtons”) appeal from a decision by the 

Court of Federal Claims (the “Claims Court”) dismissing

their request for a partial refund of taxes they paid in 

2005 as untimely and dismissing their request for “penalties” because they failed to identify any money-mandating 

source of law to support that claim. We affirm.

BACKGROUND

On May 1, 2006, the McNaughtons (husband and 

wife) filed their joint federal tax return for 2005 and 

reported a tax liability of approximately $184,000. They 

had already made tax payments totaling $281,000, so the 

Internal Revenue Service (“IRS”) issued a $97,000 refund. 

On January 7, 2010, the McNaughtons filed an amended 

2005 return and sought an additional $96,300 refund. In

a statement attached to their amended return, they 

asserted that their tax preparation software, TurboTax, 

failed to track and apply passive losses from 2004 and 

2005 to their 2005 tax return. These passive losses resulted from losses by publicly traded partnerships that 

were reflected in partnership returns in 2004 and 2005. 

Applying these passive losses to their 2005 return, they 

claimed, would have decreased their tax liability by 

$96,300.

On April 28, 2011, the IRS denied the McNaughtons’ 

refund claim. The IRS noted that Internal Revenue Code 

(“I.R.C.”) § 6511(a) required that claims for refunds must 

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MCNAUGHTON v. US 3

typically be filed within three years of the date of the 

original return, and that the McNaughtons filed their

refund claim after that three-year cut-off. Thus, the IRS 

explained, the refund claim was time-barred.

On June 13, 2013, the McNaughtons filed a complaint 

in the Claims Court, seeking the claimed $96,300 refund 

and “penalties,” alleging that the IRS’s “substantive and 

procedural conduct has been persistently and systematically violative of Taxpayers’ rights.” Supp. App. 14. On 

August 22, 2013, the government filed a motion to dismiss, arguing that the amended 2005 return was timebarred and that the McNaughtons failed to identify any 

money-mandating source of law to support the claim for 

penalties. On August 5, 2014, the Claims Court granted 

the motion to dismiss with respect to both the refund 

claim and the penalty claim.

The McNaughtons appealed to this court. We have 

jurisdiction pursuant to 28 U.S.C. § 1295(a)(3). 

DISCUSSION

We first address whether the McNaughtons’ amended 

claim is time-barred. We conclude that it is.

The general provision governing the period of limitation for refund claims is found at IRC § 6511(a), which 

provides in part: 

Claim for credit or refund of an overpayment of 

any tax imposed by this title in respect of which 

tax the taxpayer is required to file a return shall 

be filed by the taxpayer within 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, or if no return was filed by the 

taxpayer, within 2 years from the time the tax 

was paid.

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If § 6511(a) applies, it bars the McNaughtons’ claim: their 

amended return and refund request was filed more than 

three years after they filed their original return in May, 

2006, and more than two years after they originally paid 

their 2005 tax.

 The McNaughtons argue that § 6511(a) is inapplicable 

and that a four-year period of limitation applies to this 

refund claim, relying on Treasury Regulation 

§ 301.6511(g)-1. That Treasury regulation, which is a 

“[s]pecial rule for partnership items of federally registered 

partnerships,” provides a four-year period of limitation in 

limited circumstances: 

In the case of any tax imposed by subtitle A with 

respect to any person, the period for filing a claim 

for credit or refund of any overpayment attributable to any partnership item of a federally registered partnership shall not expire before . . . [t]he 

date which is 4 years after the date prescribed by 

law (including extensions thereof) for filing the 

partnership return for the partnership taxable 

year in which the item arose . . . . 

Treas. Reg. § 301.6511(g)-1(a). The 2005 partnership 

returns were due by April 15, 2006. According to the 

McNaughtons, their claim for refund was timely pursuant 

to § 301.6511(g)-1(a): they needed to have filed their 

amended return by April 15, 2010 (four years after the 

partnership returns were due on April 15, 2006), and they 

met that deadline by filing in January 2010.

Even assuming the losses the McNaughtons claim fall 

within the meaning of “partnership items” under 

§ 301.6511(g)-1(a), § 301.6511(g)-1 is, by its own terms, 

inapplicable here. Subsection (e) provides: “The provisions of this section are effective generally for partnership 

items arising in partnership taxable years beginning after 

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MCNAUGHTON v. US 5

December 31, 1978 and before September 4, 1982.” Treas. 

Reg. § 301.6511(g)-1(e). The passive losses at issue here 

resulted from the sale of publicly traded partnerships in 

2004 and 2005. Because these (purported) partnership 

items did not “aris[e]” between December 31, 1978, and 

September 4, 1982, they are not subject to the four-year 

period of limitation set forth in § 301.6511(g)-1(a).

The McNaughtons argue that § 301.6511(g)-1 was intended to have prospective effect, citing the Tax Equity 

and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248 

§ 407, 96 Stat. 324, 670 (1982). Section 407 of that Act 

provides: “the amendments made by sections 402, 403, 

and 404 shall apply to partnership taxable years beginning after the date of the enactment of this Act.” Pub. L. 

No. 97-248 § 407. But Treas. Reg. § 301.6511(g)-1 is not 

codified by sections 402, 403, or 404. Section 407’s prospective language thus has no effect on Treas. Reg. 

§ 301.6511(g)-1. Treas. Reg. § 301.6511(g)-1(a) does not 

apply, and the McNaughtons can point to no other statutory provision providing for a period of limitation longer 

than three years.

We next turn to the McNaughtons’ claim for penalties. 

The Tucker Act grants jurisdiction to the Claims Court 

only “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. § 1491(a). 

It does not itself create a substantive cause of action. 

“[I]n 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.” Fisher v. United States, 402 F.3d 

1167, 1172 (Fed. Cir. 2005). In their briefing, the 

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McNaughtons point to no such substantive law creating a 

right to money damages. Absent an affirmative moneymandating statute, the Claims Court did not have jurisdiction to adjudicate the damages claim.

We have considered the McNaughtons’ other arguments and find them to be without merit.

AFFIRMED

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