In the United States Court of Federal Claims

No. 12-432 T

(E-Filed: July 3, 2013)

________________________________________ 

)

Granting Motion to Dismiss for 

Lack of Jurisdiction; Claim for 

Refund for Tax Year as to Which 

Plaintiff Received a Notice of 

Deficiency and Filed a Petition in 

the Tax Court; I.R.C. § 6512(a)

THE CHEESECAKE FACTORY INC., )

)

 Plaintiff, )

)

v. )

 )

THE UNITED STATES OF AMERICA, )

 )

 Defendant. )

________________________________________ )

L. Richard Walton, Marina del Rey, CA, for plaintiff. 

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

General, and David I. Pincus, Chief, Court of Federal Claims Section, Tax Division, 

United States Department of Justice, Washington, DC, for defendant. 

OPINION

HEWITT, Chief Judge

The Cheesecake Factory, Inc. (plaintiff) brings this suit seeking a refund of 

penalties and interest paid to the Internal Revenue Service (IRS) for its 2005 tax year in 

the amount of $432,280 (plus interest). See Compl. for Refund of Income Taxes 

(Complaint or Compl.), Docket Number (Dkt. No.) 1, ¶ 1; id. at 11.

1

Plaintiff asserts that 

 

1

The Cheesecake Factory, Inc. (plaintiff) filed its Complaint for Refund of Income Taxes 

(Complaint or Compl.), Docket Number (Dkt. No.) 1, on July 2, 2012. The Complaint consists

of twelve pages: pages one through eleven contain numbered paragraphs, which the court cites 

by paragraph number, and pages eleven and twelve contain a “Prayer” for relief, which the court 

cites by page number. 

With the Complaint, plaintiff also filed four exhibits, see Compl. Exs. A-D, Dkt. No. 1, at 

14-32, see also Compl. ¶¶ 8, 15, 18, 20-21 (referring to the exhibits by letter), which the court 

cites by the page numbers assigned by the court’s Case Management/Electronic Case Files 

(CM/ECF) system, appearing in the top right corner of each page.
2

it overpaid penalties and interest for its 2005 tax year because the United States 

(defendant or the government), acting through the IRS, “fail[ed] to properly credit prior 

year overpayments [to plaintiff’s 2005 tax year].” See id. ¶ 1. The government has filed 

a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the 

Rules of the United States Court of Federal Claims (RCFC) and for failure to state a 

claim upon which relief can be granted pursuant to Rule 12(b)(6) of the RCFC. See The 

United States’ Mot. to Dismiss Pl.’s Compl. Pursuant to RCFC 12(b)(1) & 12(b)(6) 

(defendant’s Motion or Def.’s Mot.), Dkt. No. 13, at 1.2 The government argues that the 

court lacks jurisdiction “because plaintiff previously petitioned the United States Tax 

Court [(Tax Court)] for a determination of its tax liability for the 2005 tax[] year,” id.

(citing 26 U.S.C. (I.R.C.) § 6512(a) (2006) (limiting a taxpayer’s ability to bring a suit 

for a refund or credit of income tax for a taxable year with respect to which the taxpayer 

has filed a petition in the Tax Court in response to a notice of deficiency)), and that 

plaintiff has failed to state claim upon which relief can be granted because, “as a result of 

the Tax Court’s adjudication of that petition, this suit is also barred by principles of res 

judicata,” see id. 

Now before the court are: plaintiff’s Complaint, filed July 2, 2012; defendant’s 

Motion, filed December 5, 2012; Plaintiff’s Opposition to Defendant’s Motion to Dismiss 

Pursuant to RCFC 12(b)(1) and 12(b)(6) (plaintiff’s Response or Pl.’s Resp.), Dkt. No. 

24, filed March 1, 2013; and The United States’ Reply to Plaintiff’s Opposition to the 

United States’ Motion to Dismiss, Dkt. No. 29 (defendant’s Reply or Def.’s Reply), filed 

April 29, 2013.

For the following reasons, defendant’s Motion, to the extent that it seeks dismissal 

for lack of jurisdiction, is GRANTED and, to the extent that it seeks dismissal for failure 

to state a claim upon which relief can be granted, is DENIED as MOOT.

 

2

The United States (defendant or the government) filed The United States’ Motion to 

Dismiss Plaintiff’s Complaint Pursuant to RCFC 12(b)(1) and 12(b)(6) (defendant’s Motion or 

Def.’s Mot.), Dkt. No. 13, with eight exhibits (defendant’s exhibits or Def.’s Exs.), see generally

Def.’s Exs. 1-6, Dkt. Nos. 13-1 to 13-6; Def.’s Ex. 7, Dkt. No. 15; Def.’s Ex. 8, Dkt. No. 14. 

Appendix E of the Rules of the United States Court of Federal Claims (RCFC), which governs 

electronically filed cases such as this one, provides that an exhibit or attachment must be filed 

“electronically along with the main document under one entry number,” unless the court orders 

otherwise. RCFC app. E ¶ 8(c)(i). The court GRANTS LEAVE for defendant’s exhibits to be 

filed as submitted, notwithstanding that defendant’s Motion and its exhibits span multiple docket 

entry numbers. 

The court cites defendant’s exhibits by the page numbers assigned by the court’s 

CM/ECF system, which appear in the top right corner of each page.
3

I. Background

In August 2006 plaintiff filed a federal income tax return for its 2005 tax year,

reporting that it owed taxes in the amount of $21,117,565. See Compl. ¶ 8; Def.’s Mot. 2 

(citing Def.’s Ex. 1 (tax year 2005 (TY 2005) certificate of assessment)). Payments and 

credits to plaintiff’s 2005 tax year account totaled $18,167,100 so that, according to IRS 

records, plaintiff owed a balance of $2,950,465 on its self-assessed tax liability. See

Def.’s Ex. 1 (TY 2005 certificate of assessment) 2. The payments and credits to 

plaintiff’s account did not include plaintiff’s claimed overpayment of $3,361,942 for the 

2003 tax year, which plaintiff requested to have credited toward its 2005 tax liability on 

an amended 2003 tax return mailed on June 26, 2006. See Def.’s Ex. 2 (first amended 

2003 return) 1 (providing, on line twelve, that plaintiff wanted $3,361,942 credited to 

2005). On November 20, 2006 the IRS assessed plaintiff a tax deficiency of $2,950,465, 

a $132,770.92 penalty for failure to pay its taxes (failure-to-pay penalty) and $157,040.75 

in interest. See Def.’s Ex. 1 (TY 2005 certificate of assessment) 2. The overpayment 

claimed by plaintiff on its first amended 2003 tax return appears to have been credited to 

plaintiff’s account with interest on March 15, 2007. See id. (showing an overpayment 

credit in the amount of $3,362,960.57).

On June 14, 2007 plaintiff filed amended tax returns for 2003, 2004 and 2005 

(collectively, the amended tax returns). See Def.’s Ex. 3 (second amended 2003 return); 

Def.’s Ex. 4 (amended 2004 return); Compl. Ex. A (amended 2005 return). According to 

defendant, the amended tax returns (in addition to plaintiff’s first amended 2003 return) 

were filed in connection with an audit that included plaintiff’s 2003, 2004 and 2005 tax 

years. See Def.’s Mot. 2-3. Among other changes, the amended tax returns reduced the 

amount of plaintiff’s claimed 2003 overpayment by $395,143. See Def.’s Ex. 3 (second 

amended 2003 return) 1 (showing a self-assessed tax due in the amount of $395,143); see 

also Compl. Ex. A (amended 2005 return) 16 (stating that plaintiff’s overpayment carried 

forward from 2003 had been reduced by $395,143). Plaintiff also claimed an 

overpayment of $5,117,100 for its 2004 tax year on its amended 2004 return, which 

plaintiff requested to have credited toward its 2005 tax liability. Def.’s Ex. 4 (amended 

2004 return) 1. The 2004 overpayment credit was retroactively applied to plaintiff’s 

2005 tax account.3 See Def.’s Ex. 1 (TY 2005 certificate of assessment) 2 (showing a

2004 overpayment credit in the amount of $5,117,100, applied on April 15, 2005).

 

 

3 Because the 2004 overpayment credit of $5,117,100 was retroactively applied, it was

included in the $18,167,100 of payments and credits applied to plaintiff’s 2005 tax year account. 

See Def.’s Ex. 1 (tax year 2005 certificate of assessment) 2 (showing a 2004 overpayment credit 

in the amount of $5,117,100, applied on April 15, 2005). Therefore, plaintiff’s claim appears to 

be based only on the government’s failure to apply plaintiff’s claimed 2003 overpayment credit

of $3,361,942 to plaintiff’s $2,950,465 tax liability. 
4

Defendant states that the amended tax returns were reviewed as part of the audit 

process and that, “[a]t the conclusion of the examinations, the [IRS] accepted some of the 

bases for plaintiff’s claims for refund[] and disallowed the others.” Def.’s Mot. 3; see 

also Compl. Ex. B (notice of partial disallowance) 22 (“We have allowed part of your 

claim for an adjustment to your tax for the [2003, 2004, 2005 and 2006 tax years]. We 

are sorry, but we cannot allow the entire claim . . . .”). In the meantime, on October 1, 

2007, the IRS had assessed plaintiff a second failure-to-pay penalty in the amount of 

$44,256.98 and a second interest charge of $98,210.70. Def.’s Ex. 1 (TY 2005 certificate 

of assessment) 4. The amounts assessed on November 20, 2006 and October 1, 2007 for 

failure-to-pay penalties and interest total $432,279.35, see Def.’s Ex. 1 (TY 2005 

certificate of assessment) 2, 4 (showing assessments for failure-to-pay penalties and 

interest)--the $432,280 that plaintiff seeks to recover in this suit, see Compl. ¶¶ 7-8; id. at 

11. 

 As a result of the audit, on July 2, 2009, the IRS issued a notice of deficiency to 

plaintiff with respect to its 2005 tax year. See Pl.’s Resp. 8-9. See generally Def.’s Ex. 5 

(notice of deficiency). The notice of deficiency stated that plaintiff owed an additional 

$698,705 in taxes and a $138,741 accuracy-related penalty, unrelated to the previous 

assessments. See Def.’s Ex. 5 (notice of deficiency) 1, 3. The notice informed plaintiff, 

“If you want to contest this determination in court before making any payment, you have 

90 days from the date of this letter . . . to file a petition with the United States Tax Court.” 

Id. Accordingly, on October 5, 2009 plaintiff filed a petition with the Tax Court, seeking 

“a redetermination of the deficiency in tax and addition to tax [(also known as a penalty)] 

set forth by the Commissioner of [the IRS] in his Notice of Deficiency dated July 2,

2009.” Def.’s Ex. 6 (Pet., Cheesecake Factory, Inc. v. Comm’r, No. 23591-09 (T.C. Oct. 

5, 2009) (T.C. Pet.)) 1. Plaintiff’s case in the Tax Court was resolved on August 26, 

2010, when the Tax Court entered a decision stipulated by the parties, reducing plaintiff’s 

tax deficiency for its 2005 tax year to $383,743 and eliminating the accuracy-related 

penalty. See Def.’s Ex. 7 (Cheesecake Factory, Inc. v. Comm’r, No. 23591-09, slip op. 

(T.C. Aug. 26, 2010) (Tax Court decision or T.C. Decision)) 1.

On October 28, 2010 plaintiff filed suit in the United States District Court for the 

Central District of California (California District Court), see generally Def.’s Ex. 8 

(Compl., Cheesecake Factory, Inc. v. United States, No. 2:10-cv-08157 R (FFMx) (C.D. 

Cal. Oct. 28, 2010)), seeking a refund of taxes allegedly overpaid for its 2003 and 2004 

tax years, “as well as related penalties and interest erroneously assessed and collected for 

[its 2005 tax year],” id. at 3. Plaintiff’s case in the California District Court was resolved 

on December 16, 2011, when the California District Court dismissed the case pursuant to 

the parties’ settlement agreement. See Compl. Ex. D (Order on Stipulation for Dismissal 

Without Prejudice to Refile until July 2, 2012, Cheesecake Factory, Inc. v. United States, 

No. 2:10-cv-08157 R (FFMx) (C.D. Cal. Dec. 16, 2011) 1. The parties’ settlement 
5

agreement did “not include [plaintiff’s] claim for refund arising from interest and late 

payment penalties assessed for the late payment of taxes due from [its] 2005 tax year,” 

even though the claim was before the California District Court. Compl. Ex. C (letter 

from the IRS to plaintiff) 1 (regarding the settlement agreement). Instead, the IRS 

informed plaintiff that, although the IRS believed that plaintiff’s “2005 claim was 

properly denied, in full,” plaintiff could “still pursue this 2005 year claim in District 

Court by timely re-filing [its] suit.” Id. 

Plaintiff brought this suit seeking refund of the 2005 penalties and interest on July 

2, 2012. See generally Compl.

II. Legal Standards

A. Jurisdiction

Subject matter jurisdiction is a threshold matter that a court must determine at the 

outset of a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998); 

PODS, Inc. v. Porta Stor, Inc., 484 F.3d 1359, 1365 (Fed. Cir. 2007). Pursuant to the 

Tucker Act, the United States Court of Federal Claims (Court of Federal Claims) has 

jurisdiction over “any claim against the United States founded . . . 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.” 28 U.S.C. § 1491(a)(1) (2006). The Tucker 

Act serves as a waiver of sovereign immunity and a jurisdictional grant, but it does not 

create a substantive cause of action. Jan’s Helicopter Serv., Inc. v. Fed. Aviation Admin., 

525 F.3d 1299, 1306 (Fed. Cir. 2008). A plaintiff must, therefore, “‘identify a separate 

source of substantive law that creates the right to money damages.’” Id. (quoting Fisher 

v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in relevant part)). 

In the context of tax disputes, this means that the jurisdiction of the Court of 

Federal Claims is, generally, limited to tax refund actions.4 See 28 U.S.C. § 1346(a)(1) 

(granting the Court of Federal Claims concurrent jurisdiction with the federal district 

courts over “[a]ny civil action against the United States for the recovery of any internalrevenue tax alleged to have been erroneously or illegally assessed or collected, or any 

penalty claimed to have been collected without authority or any sum alleged to have been 

excessive or in any manner wrongfully collected under the internal-revenue laws”); 

Riggle v. United States, 131 F. App’x 273, 274 (Fed. Cir. 2005) (unpublished) (citing, 

 

4

For an example of a tax dispute over which the United States Court of Federal Claims 

(Court of Federal Claims) had jurisdiction--notwithstanding that the plaintiff did not seek a tax 

refund--see Foundation of Human Understanding v. United States, 88 Fed. Cl. 203, 208, 234 

(2009) (denying plaintiff’s request for declaratory judgment and finding that the plaintiff was 

“not a church” for purposes of tax exemption), aff’d, 614 F.3d 1383 (Fed. Cir. 2010).
6

inter alia, Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993)); cf. I.R.C. § 

7422(a) (requiring a claim for refund or credit to be filed with the Secretary of the 

Treasury (the Secretary) as a prerequisite for a tax refund suit).

In considering a motion to dismiss for lack of subject matter jurisdiction pursuant 

to Rule 12(b)(1) of the RCFC, the court must accept as true all undisputed allegations of 

fact made by the non-moving party and draw all reasonable inferences from those facts in 

the non-moving party’s favor. See Trusted Integration, Inc. v. United States, 659 F.3d 

1159, 1163 (Fed. Cir. 2011) (citing Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 

1995)). The burden is on the plaintiff to show jurisdiction by a preponderance of the 

evidence. Taylor v. United States, 303 F.3d 1357, 1359 (Fed. Cir. 2002). If the court 

determines that it does not have jurisdiction, it must dismiss the claim. See RCFC 

12(h)(3). 

B. Effect of a Tax Court Petition Pursuant to I.R.C. 6512(a)

When a taxpayer receives a notice of deficiency and acts within the applicable 

time limit, “the taxpayer may file a petition with the Tax Court for a redetermination of 

the deficiency.” I.R.C. § 6213(a). When a taxpayer takes this course of action, “no credit 

or refund of income tax for the same taxable year . . . in respect of which the Secretary 

has determined the deficiency shall be allowed or made and no suit by the taxpayer for 

the recovery of any part of the tax shall be instituted in any court,” except in certain 

limited circumstances.

5

 Id. § 6512(a). Therefore, pursuant to I.R.C. § 6512(a), “if a 

taxpayer properly files a petition with the Tax Court, he cannot later file a claim in the 

Court of Federal Claims or in a district court to obtain a credit or refund for the same 

taxable year.” Smith v. United States, 495 F. App’x 44, 48 (Fed. Cir. 2012) (per curiam) 

(unpublished); see, e.g., Gustafson v. United States, 27 Fed. Cl. 451, 453-54 (1993) 

(“Since [the] plaintiffs herein seek to recover part of the taxes they paid for [a particular] 

tax year . . . , the same tax year covered in the . . . deficiency notice and in [the] plaintiffs’ 

petition to the Tax Court, the bar in Section 6512(a) applies, and this court lacks 

jurisdiction to entertain the instant refund claim.”). 

 

5 A taxpayer may institute a suit in another court regarding the same tax year that was 

adjudicated in the United States Tax Court (Tax Court) if the suit in the other court is for 

recovery of: (1) overpayments determined by a final decision of the Tax Court; (2) any amount 

collected in excess of an amount computed in accordance with a final decision of the Tax Court;

(3) any amount collected after the period of limitation has expired for making levy or bringing a 

proceeding in court for collection; (4) overpayments that are attributable to partnership items; (5) 

any amount collected when collection or assessment was prohibited under 26 U.S.C. (I.R.C.) § 

6213(a) (prohibiting collection or assessment during the period for filing in the Tax Court); or 

(6) if appeal of a Tax Court decision is pending, refunds or credits authorized by the Tax Court 

decision to the extent that overpayments giving rise to the refunds or credits are not contested on 

appeal. See I.R.C. § 6512(a)-(b) (2006). 
7

The bar in I.R.C. § 6512(a) is applicable even if “circumstances prevented the 

taxpayer from raising an issue during the earlier Tax Court proceeding.” Solitron 

Devices, Inc. v. United States, 16 Cl. Ct. 561, 567 (1989); see also Jacob v. United States, 

No. 97-127T, 1998 WL 549383, at *4 (Fed. Cl. July 21, 1998) (stating that the 

jurisdictional bar of I.R.C. § 6512(a) “applies even in cases where the issues raised in this 

court or the district court could not have been litigated in the Tax Court because they 

arose from facts occurring after the Tax Court’s decision” (internal quotation marks 

omitted)), aff’d per curiam, 194 F.3d 1335 (Fed. Cir. 1999) (unpublished table decision). 

III. Discussion

Plaintiff asserts that “[j]urisdiction is conferred on this Court by [28 U.S.C. § 

1491] and [I.R.C. § 7422].” Compl. ¶ 2. The court agrees with plaintiff that the court’s 

jurisdiction pursuant to the Tucker Act includes claims for tax refunds, in general. Cf.

Riggle, 131 F. App’x at 274 (“Because the jurisdiction of the Court of Federal Claims is 

limited to actions for the recovery of money damages or unlawful exactions, the court has 

jurisdiction to adjudicate a tax dispute only in the form of a tax refund action.”); Shore, 9 

F.3d at 1526 (discussing this court’s jurisdiction over tax refund suits). However, the 

court’s tax refund jurisdiction is conferred by 28 U.S.C. § 1346(a)(1), not by I.R.C. § 

7422. Compare 28 U.S.C. § 1346(a)(1) (granting the Court of Federal Claims 

jurisdiction, concurrent with that of federal district courts, over civil actions against the 

United States for the recovery of erroneously collected federal income taxes or penalties) 

with I.R.C. § 7422 (governing civil actions for federal tax refunds). Moreover, the

court’s tax refund jurisdiction is limited by I.R.C. § 6512(a). 

Section 6512(a) of the Internal Revenue Code bars a taxpayer from filing a tax 

refund claim in this court for the same taxable year as to which the taxpayer received a 

statutory notice of deficiency and previously filed a petition in the Tax Court. See I.R.C. 

§ 6512(a); Smith, 495 F. App’x at 48; see, e.g., Gustafson, 27 Fed. Cl. at 453-54 (finding 

that the court lacked jurisdiction over the plaintiffs’ tax refund claim pursuant to I.R.C. § 

6512(a) when the refund claimed was for the same tax year covered in the deficiency 

notice and in the plaintiffs’ petition to the Tax Court). According to defendant, 

“[b]ecause the tax year is the cause of action, the Tax Court resolved all issues relating to 

that tax year when it entered the stipulated decision. Plaintiff may not seek to now 

litigate the 2005 tax year piecemeal before this Court.” Def.’s Mot. 7; see also id. at 6 

(“When plaintiff petitioned the Tax Court for a determination of its 2005 tax, it in effect 

brought all issues relating to the 2005 taxable year . . . .”). 

Plaintiff responds that “[t]he Court of Claims does not lose jurisdiction over 

claims before it for years in which there is a parallel proceeding in the Tax Court, unless

the Tax Court matter relates to an ‘income tax [for which the Government mails] a notice 
8

that a deficiency has been determined in respect of the tax which is the subject matter of 

the taxpayer’s suit [in the Court of Claims.]’” Pl.’s Resp. 1 (alterations in original) 

(quoting I.R.C. § 7422(e)). According to plaintiff, because the notice of deficiency in 

this case (which was issued in 2009 after plaintiff’s audit by the IRS with respect to 

plaintiff’s 2005 tax year) “had nothing to do with either of the interest and penalty

assessments in 2006 and 2007,” those assessments amounted to “zombie penalties and 

interest” as to which “no tax ‘deficiency’ was involved.” Id. at 8-9. 

However, section 7422(e) of the Internal Revenue Code, cited by plaintiff in 

support of its argument in favor of the court’s jurisdiction, see Pl.’s Resp. 6, is not 

relevant to this case because it pertains to cases filed prior to the issuance of a notice of 

deficiency. Specifically, section 7422(e) provides that, if a notice of deficiency is mailed 

“prior to the hearing of a suit brought by a taxpayer in a district court or the . . . Court of 

Federal Claims for the recovery of any income tax . . . (or any penalties relating to such 

taxes) . . . , the proceedings in [the] taxpayer’s suit shall be stayed” until the expiration of 

“the period of time in which the taxpayer may file a petition with the Tax Court for a 

redetermination of the asserted deficiency.” I.R.C. § 7422(e). If the taxpayer then files a 

petition with the Tax Court in response to the notice of deficiency, the district court or the 

Court of Federal Claims (depending on where the original suit was brought) “shall lose 

jurisdiction of [the] suit to whatever extent jurisdiction is acquired by the Tax Court.” Id. 

Here, when the notice of deficiency was issued on July 2, 2009, plaintiff had not 

yet filed this suit, nor was any suit pending in this court or any district court at the time 

that plaintiff filed its petition in the Tax Court on October 5, 2009. See supra Part I. 

Accordingly, plaintiff’s reliance on section 7422(e) is misplaced. Nevertheless, the court 

notes that, even if section 7422(e) applied, the Tax Court’s jurisdiction under section

7422(e) would still include the entire subject of the correct tax for the particular year. 

See Erickson v. United States, 159 Ct. Cl. 202, 216, 309 F.2d 760, 767 (1962) (stating 

that, once the Tax Court’s jurisdiction attaches, it “extends to the entire subject of the 

correct tax for the particular year”); cf. Tonasket v. United States, 218 Ct. Cl. 709, 711 

(1978) (“We need not decide whether section 6512(a) alone governs or whether section 

7422(e) likewise controls. Congress, it is very plain, desired that in this situation the Tax 

Court proceeding should displace a refund suit. Both sections clearly point in that 

direction.”).

Plaintiff also argues that, notwithstanding the preclusive effect of filing suit in the 

Tax Court, this court retains jurisdiction over its present refund claim “because the Tax 

Court never could have acquired any jurisdiction over the issues herein.”

6

Pl.’s Resp. 1, 

 

6 Defendant argues that, contrary to plaintiff’s assertion, the failure-to-pay penalties and 

interest at issue would have been within the Tax Court’s jurisdiction over plaintiff’s 2005 tax 

year because the Tax Court’s overpayment jurisdiction properly includes additions to tax that 
9

 

have been paid by the plaintiff. See The United States’ Reply to Pl.’s Opp’n to the United 

States’ Mot. to Dismiss (Def.’s Reply), Dkt. No. 29, at 4-6.

In support of its position, defendant cites Judge v. Commissioner, 88 T.C. 1175 (1987), 

acq. 1988-2 C.B. 1. See Def.’s Reply 4-6. In Judge, the Tax Court considered whether it had 

jurisdiction over failure-to-pay penalties assessed as a result of reported tax liabilities shown on 

the taxpayers’ return (as in the present case), as distinguished from failure-to-pay penalties 

assessed as a result of a determination of tax deficiency by the Commissioner of the Internal 

Revenue Service (IRS) (the Commissioner) in accordance with statutory deficiency procedures. 

See Judge, 88 T.C. at 1176, 1181. The Tax Court concluded that “all additions to a tax are to be 

considered part of such tax in determining the amount of an overpayment.” Id. at 1183. Further, 

the Tax Court held that I.R.C. § 6512(b), which provides the Tax Court with jurisdiction to 

determine overpayments, is broad enough to encompass “additions to tax whether or not such 

additions are subject to the deficiency procedures.” Id. at 1185. Based on Judge, defendant 

argues that, because the Tax Court had jurisdiction over plaintiff’s 2005 tax year as a result of 

the notice of deficiency and plaintiff’s Tax Court petition, “[t]he Tax Court also thereby acquired 

overpayment jurisdiction over the additions-to-tax (already paid by plaintiff) that the 

Commissioner had determined, apart from [the notice of] deficiency, on the basis of the amounts 

listed on plaintiff’s return.” Def.’s Reply 6. Defendant notes--correctly--that the cases cited by 

plaintiff with respect to this issue, see Pl.’s Opp’n to Def.’s Mot. to Dismiss Pursuant to RCFC 

12(b)(1) and 12(b)(6) (Pl.’s Resp.), Dkt. No. 24, at 4 (citing Estate of Forgey v. Comm’r, 115 

T.C. 142, 146 (2000); Newby’s Plastering, Inc. v. Comm’r, 76 T.C.M. (CCH) 399 (1998)), are 

distinguishable because, in each of the cases cited by plaintiff, there was not (as there was here) 

any deficiency with respect to the relevant tax year, see Def.’s Reply 3-4, 4 n.3; cf. Estate of 

Forgey, 115 T.C. at 147 (holding that the Tax Court lacked jurisdiction because no deficiency in 

tax existed in the “anomalous” situation that the parties’ settlement following the issuance of a 

notice of deficiency resulted in an overassessment in tax--meaning that “the tax imposed on the 

estate [did] not exceed the amount of tax shown on the estate tax return”); Newby’s Plastering, 

Inc., 76 T.C.M. (CCH) 399 (holding that the Tax Court lacked jurisdiction because the petitioner 

sought redetermination of additions to tax only, without challenging any notice of deficiency). 

Defendant also relies on Estate of Baumgardner v. Commissioner (Baumgardner), 85 

T.C. 445 (1985), for the proposition that “the Tax Court’s jurisdiction over overpayments 

pursuant to § 6512(b) include[s] overpayments of interest.” Def.’s Reply 8. Indeed, 

Baumgardner states, “Interest may be part of an overpayment if the interest accrued and was paid 

prior to the time the overpayment was claimed or arose.” Baumgardner, 85 T.C. at 452. 

Defendant correctly notes, see Def.’s Reply 8 n.6, that the case cited by plaintiff in support of its 

argument that the Tax Court lacks jurisdiction over interest redeterminations is no longer good 

law, see Pl.’s Resp. 17 (citing Bax v. Comm’r, 13 F.3d 54, 56-57 (2d Cir. 1993), superseded by 

statute, Taxpayer Bill of Rights 2 § 302, Pub. L. No. 104-168, 110 Stat. 1452, 1457-58 (1996) 

(codified as amended in relevant part at I.R.C. 6404(h)), as recognized in Hinck v. United States, 

550 U.S. 501 (2007)). 
10

13; see also id. at 12 (“[T]he law deprived the Tax Court of jurisdiction to decide the very 

matters at issue herein as set forth below. Thus, section 6512 does not apply.”), 19-20 

(similar) (citing, without explanation, Montana v. United States, 440 U.S. 147, 164 

 

Further, defendant argues that whether the Secretary of the Treasury (the Secretary) 

properly applied overpayment credits under I.R.C. § 6402--an issue that defendant characterizes 

as “plaintiff’s basis for the suit”--“is a matter entirely entrusted to the discretion of the 

Secretary.” Def.’s Reply 1-2; cf. Compl. ¶ 1 (describing the cause of action as arising “due to 

Defendant’s failure to properly credit prior year overpayments as it was instructed to do pursuant 

to [I.R.C.] § 6402”). Nevertheless, defendant contends that the Tax Court retains jurisdiction 

under I.R.C. § 6512(b)(4) to hear a claim that a plaintiff made an overpayment as a result of an 

alleged improperly applied credit. See Def.’s Reply 11-12; see also I.R.C. § 6512(b)(4) (“The 

Tax Court shall have no jurisdiction under this subsection to restrain or review any credit or 

reduction made by the Secretary under section 6402.”). Defendant relies on Winn-Dixie Stores, 

Inc. v. Commissioner (Winn-Dixie), 110 T.C. 291 (1998), see Def.’s Reply 11-12, in which the 

Tax Court held that I.R.C. § 6512(b) did not deny it jurisdiction when the petitioner in that case 

claimed that it made overpayments as a result of the Secretary’s failure to apply overpayment 

credits to later tax years, see Winn-Dixie, 110 T.C. at 294-95. According to defendant, the Tax 

Court is divested of jurisdiction only if the taxpayer seeks “to ‘restrain or prevent’ the IRS from 

using credits to reduce a refund,” which it argues is not the case here because plaintiff complains 

only about overpayments of penalties and interest and “does not challenge its refund for the 

years in question.” Id. at 11-12 (quoting Winn-Dixie, 110 T.C. at 294). 

Defendant also contends that, to the extent that plaintiff’s claim is based on I.R.C. § 

6404(a), the Tax Court has exclusive jurisdiction to provide judicial review. Id. at 8-9; cf.

Compl. ¶ 12 (invoking I.R.C. § 6404(a)); I.R.C. § 6404(a) (providing the Secretary with 

authority “to abate the unpaid portion of the assessment of any tax or any liability in respect 

thereof, which . . . is erroneously or illegally assessed”). Defendant cites to Hinck in support of 

this proposition. See Def.’s Reply 8-9. In Hinck, the United States Supreme Court held that 

I.R.C. § 6404(h), which provides the Tax Court with authority to review of the Secretary’s 

failure to abate interest, must be interpreted to define the Tax Court’s jurisdiction as exclusive. 

Hinck, 550 U.S. at 503, 506. 

Although the court need not reach the question of whether the Tax Court would have had 

jurisdiction over plaintiff’s present claim, cf. Solitron Devices, Inc. v. United States, 16 Cl. Ct. 

561, 567 (1989) (stating that, even if “circumstances prevented the taxpayer from raising an issue 

during the earlier Tax Court proceeding,” the taxpayer is barred from filing a claim for credit or 

refund of tax for the same taxable year as was litigated in the Tax Court); Jacob v. United States, 

No. 97-127T, 1998 WL 549383, at *4 (Fed. Cl. July 21, 1998) (stating that the jurisdictional bar 

of I.R.C. § 6512(a) “applies even in cases where the issues raised in this court or the district 

court could not have been litigated in the Tax Court” (internal quotation marks omitted)), aff’d

per curiam, 194 F.3d 1335 (Fed. Cir. 1999) (unpublished table decision), the court observes that 

defendant appears to be correct, at least in part, on this point.
11

(1979)). The only authority cited by plaintiff with respect to this proposition, Montana v. 

United States, see Pl.’s Resp. 19-20, offers no support for plaintiff’s position that the 

court can discern, cf. Montana, 440 U.S. at 163-64 (holding that the government was 

estopped from relitigating in federal court the Montana Supreme Court’s decision that a 

Montana state tax was constitutional).

7

 Plaintiff also relies on the notice of partial 

disallowance with respect to the amended tax returns, see Pl.’s Resp. 10, which stated 

that plaintiff “may . . . fil[e] suit with the United States District Court having jurisdiction, 

or the [Court of Federal Claims]” if it “wish[ed] to bring suit . . . for the recovery of any 

tax, penalties, or other moneys for which this disallowance notice [was] issued,”8 Compl. 

Ex. B (notice of partial disallowance) 22. Plaintiff contends that the notice of partial 

disallowance “recognized Plaintiff’s right to bring a separate action before the Court of 

[Federal] Claims with respect to these refund claims for interest and [failure-to-pay] 

penalties.” Pl.’s Resp. 10.

Defendant argues that I.R.C. § 6512(a) is applicable and bars plaintiff’s present 

claim because plaintiff received a notice of deficiency for the 2005 tax year and timely 

filed a petition with the Tax Court seeking a redetermination with respect to the notice of 

deficiency. Def.’s Mot. 5; cf. I.R.C. § 6512(a) (providing that, when a taxpayer files a 

petition in the Tax Court in response to a notice of deficiency, “no credit or refund of 

income tax for the same taxable year . . . in respect of which the Secretary has determined 

the deficiency shall be allowed or made and no suit by the taxpayer for the recovery of 

 

7

The court notes that, although not cited by plaintiff specifically, see Pl.’s Resp. 20 

(citing Montana v. United States, 440 U.S. 147, 164 (1979)), plaintiff may have intended to rely 

on footnote eleven of Montana v. United States, see Montana, 440 U.S. at 164 n.11 

(“Redetermination of issues is warranted if there is reason to doubt the quality, extensiveness, or 

fairness of procedures followed in prior litigation.”). However, because plaintiff “has not alleged 

unfairness or inadequacy in the [Tax Court] procedures to which it voluntarily submitted,” cf.

Montana, 440 U.S. at 163-64, footnote eleven of Montana does not support plaintiff’s position. 

8

Plaintiff alleges that a similar statement by an IRS employee, who “was fully aware of 

the Tax Court matter but nonetheless conceded, orally and in writing, that the matter could be 

pursued in the District Court or Court of [Federal] Claims,” could be the basis of a claim for 

“governmental estoppel.” Pl.’s Resp. 11 n.3; see also Compl. ¶ 11 (describing representations 

made by the IRS “Audit Team”). Plaintiff’s allegation fails to recognize that, because “no action 

of the parties can confer subject-matter jurisdiction upon a federal court[,] . . . the consent of the 

parties is irrelevant, [and] principles of estoppel do not apply.” Ins. Corp. of Ir. v. Compagnie de 

Bauxites de Guinee, 456 U.S. 694, 702 (1982) (internal citation omitted); see Dunklebarger v. 

Merit Sys. Prot. Bd., 130 F.3d 1476, 1480 (Fed. Cir. 1997) (“[T]he principles of estoppel do not 

apply to vest subject-matter jurisdiction where Congress has not done so.”); Colman v. United 

States, 96 Fed. Cl. 633, 639 (2011) (concluding that, even if the IRS had consented to be sued in 

a letter, the government could not be estopped from arguing that this court lacked jurisdiction on 

that basis).
12

any part of the tax shall be instituted in any court”). See generally Def.’s Exs. 5 (notice 

of deficiency), 6 (T.C. Pet.). Although defendant acknowledges that no separate notice of 

deficiency was issued with respect to the penalties and interest at issue, Def.’s Reply 2-3 

(stating that “the failure-to-pay penalties assessed in this case were explicitly exempted 

from the [Internal Revenue] Code’s [statutory] deficiency procedures”); cf. Pl.’s Resp. 2

(arguing that “the Government concedes (correctly) that the notice of deficiency . . . that 

conferred jurisdiction upon the Tax Court had nothing to do with the interest, and 

failure[-]to[-]pay penalties”), defendant argues that no separate notice of deficiency was 

required for section 6512 to apply because “plaintiff was already properly under the 

jurisdiction of the Tax Court with respect to its 2005 tax year because of the petition it 

filed there,” Def.’s Reply 3. Defendant also notes, correctly, that the IRS cannot confer 

jurisdiction upon this court by mentioning in a notice of partial disallowance that the 

Court of Federal Claims is a proper forum for a tax refund suit. See Def.’s Reply 7 n.5; 

cf. Ins. Corp. of Ir. v. Compagnie de Bauxites de Guinee, 456 U.S. 694, 702 (1982) 

(“[N]o action of the parties can confer subject-matter jurisdiction upon a federal court.”); 

Riggle, 131 F. App’x at 275 (finding that “the IRS could not create jurisdiction in the 

Court of Federal Claims by stipulation”); Colman v. United States, 96 Fed. Cl. 633, 639 

(2011) (“The IRS’s expressed consent to be sued in its form letter is immaterial. The 

IRS’s letter cannot confer jurisdiction upon this Court.”).

Pursuant to I.R.C. § 6512(a), this court lacks jurisdiction over a tax refund case if 

the plaintiff seeks a refund for the same tax year covered in a deficiency notice and in the 

plaintiff’s petition to the Tax Court. See I.R.C. § 6512(a); Smith, 495 F. App’x at 48. 

Here, plaintiff properly filed a Tax Court petition in response to a notice of deficiency 

issued with respect to its 2005 tax year. Compl. ¶ 17; see also Def.’s Exs. 5 (notice of 

deficiency), 6 (T.C. Pet.). Therefore, pursuant to I.R.C. § 6512(a), “no credit or refund of 

income tax for the same taxable year . . . in respect of which the Secretary has determined 

the deficiency shall be allowed . . . and no suit by the taxpayer for the recovery for any 

part of the tax shall be instituted in any court.” I.R.C. § 6512(a). It is immaterial whether 

“the Commissioner issue[d] a Notice of Deficiency with respect to the penalties [and 

interest] . . . which are the subject of this Complaint,” cf. Pl.’s Resp. 26, because the bar 

in I.R.C. § 6512(a) applies as long as “the Secretary has mailed to the taxpayer a notice of 

deficiency” and “the taxpayer [has properly] file[d] a petition with the Tax Court . . . for 

the same taxable year,” I.R.C. § 6512(a). 

Nevertheless, plaintiff argues that its present claim should not be barred by I.R.C. 

§ 6512(a) because of the exception described in I.R.C. § 6512(a)(2) for amounts collected 

in excess of an amount computed in accordance with a final decision of the Tax Court. 

See Pl.’s Resp. 16. Plaintiff contends that this “exception could arguably apply” given

that the IRS collected the full $383,733 tax deficiency determined by the Tax Court plus
13

the $432,280 in interest and penalties at issue here. See id. (citing Def.’s Exs. 1 (TY 

2005 certificate of assessment), 7 (T.C. Decision)). Plaintiff’s argument is misplaced.

The provision cited by plaintiff exempts from the litigation bar contained in I.R.C. 

§ 6512(a) “any amount collected in excess of an amount computed in accordance with [a] 

decision of the Tax Court which has become final.” I.R.C. § 6512(a)(2). Here, the 

penalties and interest at issue were assessed in 2006 and 2007, see Def.’s Ex. 1 (TY 2005 

certificate of assessment) 2 (showing 2006 assessment), 4 (showing 2007 assessment), 

and were paid by plaintiff before plaintiff filed suit in the Tax Court in October 2009, see

Pl.’s Resp. 9 (stating that plaintiff paid the assessed penalties and interest “under protest, 

and then timely filed a refund claim with the [IRS]”); Def.’s Mot. 2 (stating that plaintiff 

paid the 2006 assessment in full on March 15, 2007 and the 2007 assessment in full on 

October 1, 2007). Plaintiff’s Tax Court case was resolved by a stipulated decision, 

stating that there remained “a deficiency in income tax due from petitioner for the taxable 

year 2005 in the amount of $383,743.00” but no “penalty due . . . under the provisions of 

I.R.C. § 6662(a).” Def.’s Ex. 7 (T.C. Decision) 1. The Tax Court decision, therefore, 

pertained only to amounts still due at the time of the decision. See id. Penalties and 

interest paid prior to the Tax Court decision cannot be said to have been “collected in 

excess” of the remaining $383,743 balance determined by the Tax Court. Cf. I.R.C. § 

6512(a)(2). 

In addition, to the extent that plaintiff can be understood to argue that failure-topay penalties “are not ‘tax’” pursuant to I.R.C. § 6665(b), cf. Pl.’s Resp. 11 (arguing that, 

because failure-to-pay penalties “are not ‘tax’ . . . the Tax Court does not have 

jurisdiction to adjudicate them”), 21-23 (similar), and therefore are not subject to subject 

to the bar in I.R.C. § 6512(a), plaintiff is mistaken. Section 6665(b) states that failure-topay penalties are not treated as tax only “[f]or purposes of subchapter B of chapter 63 

(relating to deficiency procedures[)].” I.R.C. § 6665(b). “Section 6512, however, is not 

part of subchapter B of chapter 63.” Judge v. Comm’r, 88 T.C. 1175, 1183 (1987), acq.

1988-2 C.B. 1. For matters outside of subchapter B of chapter 63 of the Internal Revenue 

Code, failure-to-pay penalties are treated as tax. Cf. id. (stating that a “literal reading” of 

the applicable provisions “lead[s] to the conclusion that all additions to a tax are to be 

considered part of such tax in determining the amount of an overpayment”); I.R.C. §

6665(a)(2) (stating the general rule that “any reference in [the Internal Revenue Code] to 

‘tax’ imposed by [the Internal Revenue Code] shall be deemed also to refer to . . . 

additions to the tax, additional amounts, and penalties”). Because plaintiff now seeks “a 

refund of income tax for the same taxable year” as to which plaintiff received a notice of 

deficiency and filed a petition in the Tax Court--that is, plaintiff seeks a refund of 

penalties and interest assessed and paid in relation to plaintiff’s 2005 tax year, cf. I.R.C

§§ 6665(a)(2) (treating penalties as tax, generally), 6601(e)(1) (treating interest as tax, 
14

generally)--this court lacks jurisdiction over plaintiff’s claim, cf. I.R.C. § 6512(a); Smith, 

495 F. App’x at 48.

For the foregoing reasons, defendant’s Motion, to the extent that it seeks dismissal 

for lack of jurisdiction, is GRANTED and, to the extent that it seeks dismissal for failure 

to state a claim upon which relief can be granted,9is DENIED as MOOT. The Clerk of 

Court SHALL ENTER JUDGMENT for defendant. No costs. 

IT IS SO ORDERED.

s/ Emily C. Hewitt 

EMILY C. HEWITT

Chief Judge

 

9

The court notes that, based on the facts alleged by plaintiff, plaintiff’s present claim would 

likely be barred even if I.R.C. § 6512(a) were not applicable. Because the Tax Court’s 

jurisdiction attaches “to the entire subject” of the tax year before it, see Erickson v. United 

States, 159 Ct. Cl. 202, 216, 309 F.2d 760, 767 (1962), and because plaintiff petitioned the Tax 

Court for a redetermination of its 2005 tax deficiency, see generally Def.’s Exs. 6 (Pet., 

Cheesecake Factory, Inc. v. Comm’r, No. 23591-09 (T.C. Oct. 5, 2009)), 7 (Cheesecake Factory, 

Inc. v. Comm’r, No. 23591-09, slip op. (T.C. Aug. 26, 2010)), the court--even if it had 

jurisdiction--would likely be required to dismiss plaintiff’s claim based on a theory of res 

judicata, see Curtin v. United States, 102 Fed. Cl. 769, 772 (2012) (“[W]hen a taxpayer petitions 

the Tax Court for a redetermination, the Court of Federal Claims must dismiss any claims 

seeking a refund of overpayments.”); see also Erickson, 159 Ct. Cl. at 217, 309 F.2d at 768 

(stating that a Tax Court decision entered on the basis of a stipulated agreement is res judicata

for the years involved).