In the United States Court of Federal Claims

No. 11-456T

(Filed: January 27, 2014)

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Rule 59 Motion for Reconsideration; 

Subject Matter Jurisdiction over Trust 

Fund Recovery Penalty (TFRP) Suits; 

“Responsible Person” under 26 U.S.C. 

§ 6672; Divisible Tax Exception to Full 

Payment Rule. 

*

JONATHAN L. KAPLAN, *

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 Plaintiff, *

*

v. *

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THE UNITED STATES, *

*

 Defendant. *

*

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Rachael E. Rubenstein, Center for Legal and Social Justice, Saint Mary’s University

School of Law, San Antonio, Texas, for Plaintiff.

Carl D. Wasserman, with whom were Kathryn Keneally, Assistant Attorney General, 

David I. Pincus, Chief, and G. Robson Stewart, Assistant Chief, Court of Federal Claims 

Section, Tax Division, U.S. Department of Justice, Washington, D.C., for Defendant.

OPINION AND ORDER

ON PLAINTIFF’S MOTION FOR RECONSIDERATION

WHEELER, Judge.

On October 9, 2013, the Court granted Defendant’s motion to dismiss Plaintiff 

Jonathan L. Kaplan’s complaint for lack of subject matter jurisdiction. On November 7, 

2013, Mr. Kaplan filed a motion for reconsideration pursuant to Rule 59 of the Rules of 

the U.S. Court of Federal Claims. The Government filed a response in opposition to the 

motion, and Mr. Kaplan filed a reply in support. This motion has been fully briefed, and 

the matter is now ready for decision. For the reasons explained below, Plaintiff’s motion 

for reconsideration is GRANTED.
Background

On December 20, 2010, the Internal Revenue Service (“IRS”) assessed $86,902.76

in trust fund recovery penalties against Mr. Kaplan after determining that for the first 

three quarters of 2008, he had failed to pay employment taxes for the employees of 

Merchants Restaurant SA, LLC (“Merchants Restaurant”) as required by I.R.C. § 6672. 

Kaplan v. United States, 113 Fed. Cl. 84, 85 (2013). Mr. Kaplan subsequently made

three $100 payments toward the penalties associated with the three respective tax quarters 

and claimed a refund for each payment. Id. When the IRS denied his claims and 

demanded payment of the full penalty, Mr. Kaplan filed his complaint in this Court, 

seeking a refund of his $300 in tax payments and a determination that he is not liable for 

the trust fund recovery penalties. Id.

Prior to arguing the merits of the case, the Government filed a motion to dismiss 

Mr. Kaplan’s complaint because his $100 payments did not satisfy the jurisdictional 

requirement that he “pay the entire assessment for at least one employee per quarter.” 

Def.’s Mot. to Dismiss 1. The Government demonstrated that Plaintiff had “produced no 

evidence” showing the assessed tax for any employee in any of the relevant quarters. Id.

at 1-2, 6-7. Mr. Kaplan responded by providing one week’s worth of payroll records and, 

by extrapolation, arguing that this evidence was sufficient to meet his burden of 

establishing subject matter jurisdiction by a preponderance of the evidence. Pl.’s Resp. to 

Def.’s Mot. to Dismiss 4-6. The Court disagreed, concluding that one week’s worth of 

records was an insufficient basis from which to extrapolate the data for a thirteen-week 

quarter, and therefore dismissed the complaint. Kaplan, 113 Fed. Cl. at 86-87. On 

November 7, 2013, Mr. Kaplan filed his motion for reconsideration.

Discussion

A. Standard of Review

To succeed, a motion for reconsideration must show “exceptional circumstances 

justifying relief based on a manifest error of law or mistake of fact.” Stueve Bros. Farms, 

LLC v. United States, 107 Fed. Cl. 469, 474 (2012) (citations and internal quotation 

marks omitted), aff’d, 737 F.3d 750 (Fed. Cir. 2013). This showing can be made on one 

of three grounds: (1) an intervening change in the controlling law; (2) the availability of 

previously unavailable evidence; or (3) the necessity of preventing manifest injustice. 

Bishop v. United States, 26 Cl. Ct. 281, 286 (1992).

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B. Analysis

In this case, Plaintiff’s motion is based on the third ground. Mr. Kaplan asserts

that the Court “effectively conclude[d] that Plaintiff is a ‘responsible party’ before he 

ha[d] the opportunity to present the merits of his case” and thereby denied his access to a 

proper forum. Pl.’s Reply 2. This assertion represents a shift in Plaintiff’s legal theory. 

Earlier Mr. Kaplan argued that he could establish subject matter jurisdiction by 

extrapolating from limited records, see Pl.’s Resp. to Def.’s Mot. to Dismiss 4-6, but now 

he argues that he can establish jurisdiction without any records at all, see Pl.’s Mot. for 

Recons. 13. Although the Government is correct that ordinarily “an argument made for 

the first time in a motion for reconsideration comes too late,” this is only a general 

principle that is subject to exceptions. Bluebonnet Sav. Bank, F.S.B. v. United States, 

466 F.3d 1349, 1361 (Fed. Cir. 2006); Gen. Elec. Co. v. United States, 416 F.2d 1320, 

1322 (Ct. Cl. 1969). Ultimately, whether to grant a motion for reconsideration is left to 

the sound discretion of the trial court. Martin v. United States, 101 Fed. Cl. 664, 671 

(2011), aff’d sub nom. Fournier v. United States, No. 2012-5056, 2012 WL 6839784 

(Fed. Cir. Nov. 27, 2012). As explained below, in this case the Court agrees with Mr. 

Kaplan’s argument that reconsideration is necessary to prevent manifest injustice.

The crux of this argument lies in the competing evidentiary burdens imposed by

the jurisdictional and liability standards in this type of divisible tax refund suit. Under 

§ 6672, liability is imposed on a “responsible person” (defined as “[a]ny person required 

to collect, truthfully account for, and pay over” employment taxes) who willfully fails to 

fulfill his statutory responsibilities. Jenkins v. United States, 484 F. App’x 511, 515 

(Fed. Cir. 2012) (citing Godfrey v. United States, 748 F.2d 1568, 1574 (Fed. Cir. 1984)). 

The foundation of Mr. Kaplan’s claims is that he was never “required to collect, 

truthfully account for, and pay over employment taxes” for Merchants Restaurant, and

therefore never had control of the documents related to these requirements. Compl ¶¶ 6, 

8, 13-14. In fact, even though he is listed as one of the company’s three managing 

members in its certificate of formation, he claims that he “was unaware of this status and 

never agreed to assume such responsibility.” Id. ¶ 7.

However, in order to establish the Court’s subject matter jurisdiction, Mr. Kaplan 

must prove by a preponderance of the evidence that he has paid the assessed tax for at 

least one employee. Cencast Servs., L.P. v. United States, 94 Fed. Cl. 425, 435 n.7, 439 

(2010), aff’d, 729 F.3d 1352 (Fed. Cir. 2013). More precisely, he must show that his 

payments of $100 were sufficient to cover the full assessment attributable to at least one 

employee in each quarter. This, of course, cannot be done without some record of the 

amount of payroll taxes assessed per employee per quarter. In his motion for 

reconsideration, Mr. Kaplan relates in detail his diligent but futile efforts at obtaining 

these records. Pl.’s Mot. for Recons. 6-11. He then explains that he is unable to provide 

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this evidence for exactly the same reason he is not liable for the assessed taxes, that is, he 

is not a responsible person under § 6672. Id. at 12.

Thus, assuming these representations are true, Mr. Kaplan is caught in an 

“evidentiary Catch-22.” In order to prove the merits of his argument that he is not a 

“responsible person,” he must first produce the evidence for which he is not responsible. 

This inequity is magnified by the fact that the Government is itself unable to state what 

minimum payment would be sufficient. See id. at 9-10; Def.’s Resp. to Pl.’s Mot. for 

Recons. 7.

In the end, the merits of this case will turn on whether Mr. Kaplan is liable for the 

full $86,902.76 penalty, and the divisible amount at issue is merely representative of that 

full amount. Indeed, “[w]hen a taxpayer sues for a refund based on a divisible refund 

claim, it is meant to ‘test the validity of the entire assessment.’” Cencast, 729 F.3d at 

1366 (quoting Lucia v. United States, 474 F.2d 565, 576 (5th Cir. 1973)). Under the

circumstances of this case, the Court is not inclined to prevent Mr. Kaplan from 

challenging that full assessment in this forum simply because the representative amount 

he paid might not be representative enough. Accordingly, the Court accepts the three 

$100 payments as sufficient to establish subject matter jurisdiction. See, e.g., Schultz v. 

United States, 918 F.2d 164, 165 (Fed. Cir. 1990) (accepting plaintiff’s payment of $100 

toward the $20,691.38 penalty assessed against him); Cook v. United States, 52 Fed. Cl. 

62, 66 (2002) ($97,760.00 penalty).

Conclusion

For the reasons set forth above, Plaintiff’s motion for reconsideration is 

GRANTED, and the Government’s motion to dismiss the complaint for lack of subject 

matter jurisdiction is DENIED. The Government’s motion to dismiss its counterclaim is 

DENIED without prejudice. The Court’s earlier decision in Kaplan v. United States, 113 

Fed. Cl. 84 (2013), is VACATED.

The Court will contact counsel for the parties shortly to set a new trial date.

IT IS SO ORDERED.

s/ Thomas C. Wheeler

THOMAS C. WHEELER

Judge

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