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No. 17-7667

(Filed: December 12, 2017)

NOT FOR PUBLICATION

* * * * * * * r! * * * * * * * * * * * * {. * * r. * * * ** * ** * * * * *

KIRELL FRANCIS BETTIS.

Plaintiff *

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:F

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DEC | 2 2017

U.S. COURT OF

FEDERALCLAIMS

Pro Se Plaintiff; Motion to Dismiss; RCFC

l2(bXl); Tax Refund; Flora Full Payment

Rule

THE UNITED STATES,

Def-endant. ;

* * * t' {. 1. *( * r' {.,i. * *' t'1. *. 1. *! {. * {. * * {. * {. * * * * * * * * * r. *

OPINION AND ORDER

This case stems from an alleged wrongful denial by the Intemal Revenue Service ("lRS")

of a tar refund claim frled by plaintiffKirell Francis Bettis (a{</a Kirell Francis Taylor or Kirell

Francis Bettis-Taylor) as trustee of the Kirell Francis Bettis Trust (the "Trust"). Plaintiff seeks

the refund ofan alleged $1,208,796,038 overpayment ofpayroll and income taxes for the 2015

tax year. Defendant seeks dismissal ofthe suit under Rule 12(b)(1) of the Rules ofthe United

States Court of Federal Claims ("RCFC"). As explained below, because plaintiff has not paid

his tax liability prior to seeking reliefin the United States Court ofFederal Claims ("Court of

Federal Claims"), the court lacks jurisdiction to entertain plaintiffs claims and therefore must

dismiss plaintiff s complaint.

I. BACKGROUND

Plaintiff alleges that he owns a financial instrument worth $850 billion, from which he

derives an annual fiduciary fee of$5,162,202,116. Compl. tffl 1-2. The "asset" is purportedly a

"Floating Irrevocable Letter of Credit" issued by the State of Califomia on April 4, 1878 (the

"Instrument"), and was intended to be a "thirty-year public finance transaction" effective

beginning on "the first date ofbookkeeping ofany credit transaction with any public or private

person or entity," but no later than April4,2045. Pl.'s Resp. to Def.'s Mot. to Dimiss ("P1.'s

Resp.") Ex. A at 13.t The Instrument had previously been "lost" but was later "found" by

' The exhibits attached to plaintiff s response were not separately numbered. Plaintiff

instead numbered his response and attached exhibits consecutively, as ifthey were all one

document. The court refers to the page numbers designated by plaintiff

?ul,? 1q58 0000 13qE 0553
plaintiff. Compl. Ex. A at 6.2 The Instrument provides for its possessor to sign the name of

Califomia Govemor William Irwin "on [the govemor's] behalf'and to affix the name of the

possessor to the face ofthe Instrument.3 Pl.'s Resp. Ex. A at 13. Plaintiff appears to have signed

William Irwin's name and affixed the name of the Trust to the face of the Instrument on June 17,

1999. Id. Plaintiff subsequently executed, effective January 1,2014, a rider that purportedly

shortened the obligation period to seventeen years, providing approximately $50 billion in

original issue discount ("OID") interest annually. Seeid.at15-19. The alleged "withholding" of

the 2014 OID interest ostensibly created income for 2015. id. at 12. the vear at issue in the

instant case.

For 2014 and 2015, the OID interest income flowing from the Instrument totaled

$102,720,000,000. Compl. fl 2. Of that amount, plaintiffallocated $48,778,898,943 to the

United States Treasury and $48,778,898,941 to the Califomia Franchise Tax Board, and charged

the Trust a "fiduciary fee" of $5,162,202,116. Id.nn2, 17. Plaintiff then sought to monetize his

fiduciary fee by effecting various tax filings on behalfofthe Trust.

Plaintiff filed a Form 941, Employer's Quarterly Federal Tax Retum, on behalf of the

Trust for each quarter of 2015 on February 22, 2016. Pl.'s Resp. Ex. B at26-33. That same day,

plaintiffalso filed a Form 945, Annual Retum of Withheld Federal Income Tax, on behalf of the

Trust for the 2015 tax year. a Id. at 33-34. However, no 1099, W-2, or other filing was effected,

id. at 35 (plaintiff s individual Wage and Income Transcript for 2015), and plaintiff did not file

an individual income tax retum for 2015, id. at 36 (plaintiff s individual Tax Account Transcript

for 2015). In his filings, plaintiff reported the following approximate tax liabilities:

o Form 941, first quarter 2015-$ 1.143 billion, id. at 26;

o Form 941, second quarter 2015-$1.153 billion, id. at 28;

r Form 941, third quarter 2015-$370 million, id. at 30;

r Form 941, fourth quarter 2015-$370 million, id. at 32; and

2 The exhibits attached to plaintifF s complaint were not separately numbered. Plaintiff

instead numbered his complaint and attached exhibits consecutively, as ifthey were all one

document. The court refers to the page numbers designated by plaintiff.

3 Pursuant to Rule 20 1 of the Federal Rules of Evidence, the court takes j udicial notice

that William Irwin was indeed the govemor of Califomia on April 4, 1878. See. e.s., Califomia

State Library, The Govemors' Gallery, http://govemors.library.ca.gov/ (last visited Dec. 11,

2017). Govemor Irwin served from 1875 until 1880 before passing away in 1886. Id.

a The purpose ofForm 945 is to report federal income tax withheld on nonpayroll

palments, which are often reported on Form 1099-MISC. United States Treasury, Instructions

for Form 945 (2015), at 2.

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. Form 945, calendar year 2015-$1 billion, id. at 33.

No payment was included with any of the retums, and the IRS assessed interest and penalties for

late filing, late payrnent, and failure to make deposits. ld. at26-34. The Trust was also assessed

civil penalties for filing frivolous retums . Id. at 37; Compl. Ex. A at 6; Compl. Ex. E at 771'

Compl. Ex. F at 19-20. The civil filing penalties were later removed. Compl. Ex. Kat 32; Pl.'s

Resp. Ex. B at 38. Plaintiffargues that the IRS Notice CP210 informing plaintiff that the 2015

civil penalties against the Trust were removed effectively "certified" plaintiffas a "bona fide

billionaire." Compl. Ex. K at32-34.

On or about May 23,2016, an amended 2015 Form 945 was filed for the Trust. Def.'s

Mot. to Dismiss ("Def.'s Mot.") Ex. 7 at2. The Trust's Form 945 tax liability, including interest

and penalties, was subsequently abated in their entirety for the 2015 tax year. Id,. at 3-4.

After the IRS issued notices ofbalance due for the Trust's outstanding Form 941

liabilities, see. e.g., Compl. Ex. D at 14, plaintiffpurported to pay his 2015 estimated tax liability

for Form 1041, U.S. Income Tax Retum for Estates and Trusts, by mailing fow Forms 1041-ES,

2015 Payment Voucher, to the IRS on or about December 31,2016. Pl.'s Resp. Ex. C at 46-47 .

As payment, plaintiff attached a "Performance Bond for Other Than Construction Contracts" to

each of the four vouchers. Id. at 49-7l. Each performance bond purported to obligate the Trust

to pay the IRS approximately $25 to $26 billion out of the Instrument. See. e.e., id. at 49, 52.

On or about February 2,2017, plaintiff filed Form 843, Claim for Refund and Request for

Abatement, seeking a refi.urd ofForm 941,1040, 1040X, and 1041 taxes for the 2015 calendar

year in the amount of approximately $391 million. Pl.'s Resp. Ex.D at74. Plaintiff did not

provide any basis for the refi.rnd beyond referring to "records on fiIe." Id. The IRS denied

plaintiffs refund request on March 1, 2017, and assessed a $5,000 civil penalty for filing a

frivolous retum. Compl. Ex. M at 40-42. Plaintiff responded on March 7 ,2017 , contending that

the IRS had previously determined his filings were not frivolous. Id. at 40.

Amended Forms 941 were filed on behalf of the Trust on or about May 8, 2017. Def.'s

Mot. Ex. 6 at2-3. The Trust's entire Form 941 tax liability, including interest and penalties, was

subsequently abated for each quarter ofthe 2015 tax year.s Def.'s Mot. Exs. 3-6.

Plaintiffthen filed a Form 1041 on behalfofthe Trust for the 2015 calendar year. Pl.'s

Resp. Ex. B at 40-44. The Trust's 2015 Form 1041 was dated May 22,2017, and received by the

IRS on Jnne 9,2017. ld,. at39-40. The retum reported the following items:

o OID interest income-$102,720,000,000;

. Fiduciary fees-$5,162202,116;

5 An abatement reverses an unpaid assessment ofa tax liability; it is not a credit as a

result of a payment. See Treas. Reg. g 30 1.6a0a-1 (a) (201 6).

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. Income distribution deduction-$48.778.898.941 :

o Total tax-$30,687,1 12,1 l0;

. Federal income tax withheld from Forms 1099-

$ 102.720.000.000:

o Estimated tax penalty-$ 15,408,000,000; and

r Refund due-$53,941,101,060.

Id. at 40. In figuring the Trust's tax liability, plaintiffreported $12,834,032,970 in "employment

taxes" from Forms 941,941X, ard 945. Id,. at41. In addition, the Schedules K-l, Beneficiary's

Share oflncome, Deductions, Credits, etc., attached to the retum showed interest income of

$48,778,898,940 to the IRS, $48,778,898,940 to the Califomia Franchise Tax Board, and

95,162,202,116 to plaintiff. Id. at42-44. Plaintiff alleges that he continues to cause

$129,046,224 in payroll taxes to be deposited semiweekly using his "trade secret" method of

payment, Compl. tf 11, which apparently involves issuing "payment bonds" against the

Instrument.

Plaintiff filed suit in this court on June 6, 2017, seeking a refund of $ 1,208,796,03 8 in

overpaid taxes as a result ofhis $5.2 billion "frduciary fee." Compl. 4. Defendant moved to

dismiss the suit on Septemb er 27 ,2017 , arguing generally that neither plaintiff nor the Trust ever

paid any tax liabilities, and thus this court lacks jurisdiction to entertain plaintiffs complaint.

Def.'s Mot. 3. The motion is now fully briefed. and the court considers oral arsument

unnecessary.

II, LEGALSTANDARDS

A. Pro Se Plaintiffs

Pro se pleadings are "held to less stringent standards than formal pleadings drafted by

lawyers" and are "to be liberally construed." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per

curiam) (intemal quotation marks omifted). However, the "leniency afforded to a pro se litigant

with respect to mere formalities does not relieve the bwden to meet jurisdictional requirements."

Minehan v. United States, 75 Fed. Cl.249,253 (2007); accord Henke v. United States, 60 F.3d

795, 799 (Fed. Cir. 1 995) ("The fact that [the plaintifl acted p1959 in the drafting of his

complaint may explain its ambiguities, but it does not excuse its failures, if such there be."). In

other words, a oro se plaintiff is not excused from its burden ofproving, by a preponderance of

evidence, that the court possesses jurisdiction. See McNutt v. Gen. Motors Acceptance Corp.,

298 U.S. 178, 179 (1936); Banks v. United Stares,741F.3d 1268, 1277 (Fed. Cir. 2014) (citing

Reynolds v. Armv & Air Force Exch. Serv. ,846 F.2d746,748 (Fed. Cir. 1988)).

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B. Standard of Review Under RCFC 12(bxl)

In determining whether subject matter jurisdiction exists, the court "must accept as true

all undisputed facts asserted in the plaintiffs complaint and draw all reasonable inferences in

favor ofthe plaintiff." Trusted Inte$ation. lnc. v. United States, 659 F.3d 1 159, 1163(Fed.Cir.

2011). With respect to a motion to dismiss for lack of subject matter jurisdiction pursuant to

RCFC 12(bX1), the plaintiffbears the burden ofproving, by a preponderance of evidence, that

the court possesses subject matter jurisdiction. Id. The court is not limited to the pleadings in

considering subject matter j urisdiction. Banks,741 F.3dat1277; Pucciariello v. United States,

116 Fed. Cl.390,400 (2014). Ifthe court finds that it lacks subject matter jurisdiction over a

claim, RCFC 12(h)(3) requires the court to dismiss that claim.

C. Subject Matter Jurisdiction

Whether the court possesses jurisdiction to decide the merits of a case is a "threshold

matter." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83,94-95 (1998). Subject matter

jurisdiction carurot be waived or forfeited because it "involves a court's power to hear a case."

United States v. Cotton, 535 U.S. 625,630 (2002), ouoted in Arbaugh v. Y&H Corp., 546 U.S.

500,514(2006). "Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction

is power to declare the law, and when it ceases to exist, the only function remaining to the court

is that of announcing the fact and dismissing the cause." Ex parte McCardle, 74 U.S. (7 WalD

506, 514 (1868). Therefore, it is "an inflexible matter that must be considered before proceeding

to evaluate the merits of a case." Matthews v. United States,72Fed. CI.274,278 (2006); accord

K-Con Bldq. S),s.. Inc. v. United States,778F.3d 1000, 1004-05 (Fed. Cir.20l5). Either parry,

or the court sua sponte, may challenge the court's subject matter j urisdiction at any time.

Arbaueh, 546 U.S. at 506.

D. Tucker Act

The ability of the Court ofFederal Claims to entertain suits against the United States is

limited. "The United States, as sovereign, is immune from suit save as it consents to be sued."

United States v. Sherwood, 312 U.S. 584, 586 (1941). The waiver of immunity "may not be

inferred, but must be unequivocally expressed." United States v. White Mountain Apache Tribe,

537U.S.465,472 (2003). Further, "[w]hen waiver legislation contains a statute of limitations,

the limitations provision constitutes a condition on the waiver of sovereign immunity." Block v.

North Dakota ex rel. Bd. ofUniv. & Sch. Lands, 461 U.S. 273,287 (1983).

The Tucker Act, the principal statute goveming the jurisdiction ofthis court, waives

sovereign immunity for claims against the United States, not sounding in tort, that are founded

upon the constitution, a federal statute or regulation, or an express or implied contract with the

United States. 28 U.S.C. $ 1491(a(1) (2012); White Mountain, 537 U.S. at 472. However, the

Tucker Act is merely ajurisdictional statute and "does not create any substantive right

enforceable against the United States for money damages." United States v. Testan, 424U.5.

392,398 (1976). Instead, the substantive right must appear in another source of law, such as a

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"money-mandating constitutional provision, statute or regulation that has been violated, or an

express or implied contract with the United States." Loveladies Harbor. Inc. v. United States, 27

F.3d 1545, 1554 (Fed. Cir. 1994) (en banc).

E. Tax Refund Suits

Congress has ganted the Court of Federal Claims the authority to entertain tax refund

suits. 28 U.S.C. $ 13a6(a)(1); United States v. Clintwood Elkhom Minins Co., 553 U.S. 1,4

(2008). To bring a tax refund suit, a plaintiffmust:

. make full payment of its tax liabilities, Flora v. United States,

3s7 U.S. 63, 7s (19s8);

r file a timely claim for refund with the IRS, I.R.C. g 7422(a)

(2012); anq

o file a timely complaint after the refund claim is denied or

deemed denied, I.R.C. g 6532(a).

Plaintiffs filing a tax refund suit in the Court of Federal Claims must include the following with

the complaint:

(1) a copy ofthe claim for refund, and

(2) a statement identifying:

(A) the tax year(s) for which a refund is sought;

(B) the amount, date, and place ofeach payment to be

refirnded;

(C) the date and place the retum was filed, if any;

(D) the name, address, and identification number (under

seal) ofthe taxpayer(s) appearing on the retum;

(E) the date and place the claim for refund was frled; and

(F) the identification number (under seal) of each plaintiff, if

different from the identification number of the taxDaver.

RCFC 9(m).

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III. DISCUSSION

Plaintiffhas substantially complied with the pleading requirements of RCFC 9(m). In

addition, the court assumes (without deciding) that plaintiffhas satisfied the second and third

jurisdictional prerequisites-filing a timely refund claim with the IRS and filing a timely

complaint following denial of that claim-because (1) taxes were allegedly paid on December

31,2016, (2) plaintifffrled a refund claim with the IRS on February 2,2017, (3) the refund claim

was denied on March 1,2017, and (4) plaintiff s complaint was filed in this court on June 6,

2017.o However, that does not end the court's jurisdictional inquiry. Rather, the court must still

determine whether the Trust has fully paid its tax liabilities prior to the filing of the complaint.

Under the fuIl payment rule, a court's jurisdiction over tax refund claims is limited to

those claims where the taxpayer has fully paid all taxes assessed for the tax year at issue prior to

filing suit. Flora, 357 U.S. at 75. In other words, "payment of the assessed taxes in full is a

prerequisite to bringing a refund claim." Ledford v. United States,297 F.3d 1378, 1382 (Fed.

Cir. 2002); accord Artuso v. United States, 80 Fed. Cl. 336,338 (2008) ("A refi.rnd suit is exactly

what the descriptive term implies. Under the 'full payment rule' a plaintiff must have fully paid

the tax, pena.lties, and interest at issue.").

Plaintiffalleges that defendant is in possession of"money had and received from

plaintiff," Pl.'s Resp. 1, as a result of the purported performance bonds that plaintiff has posted.

Plaintiffis correct that remittance ofa bond can be used to satisfy tax liabilities (although the

term "bond" is no longer used). Pursuant to I.R.C. $ 6603(a), taxpayers "may make a cash

deposit_. . . to pay any tax . . . which has not been assessed at the time of the deposit" (emphasis

added).' Deposits not used for the payment of tax may be refunded upon request. I.R.C.

$ 6603(c). Taxpayers may make such a deposit by "remitting to the [IRS] . . . a check or a

money order accompanied by a written statement desigrrating the remittance as a deposit. The

wdtten statement also must include: (a) [t]he Ope(s) oftax; (b) [t]he tax year(s); and (c) [a]

statement . . . identifuing the amount of and basis for tle disputable tax." Rev. Proc. 2005- 1 8,

$ 4.01(1), 2005-l C.B. 798. Remittances not designated as a deposit are treated as payments and

applied against outstanding tax liabilities, including penalties and interest. Id. $ a.01(2). The

term "cash bond" was previously used, in now-superseded Revenue Procedure 84-52, l9g4-1

C.B. 551, to describe deposits made to suspend interest accrual. Id. $ 2.06.

Plaintiff is also correct that "[u]sing an eligible obligation instead of a surety bond for

security is the same as using[, among other options,] cash." 31U.S.C. $9303(c)(2012).

0 Plaintiffdoes not appear to have filed a valid refund claim pursuant to Treas. Reg.

g 301.6402-2(b)(1). However, because defendant did not contest the validity of plaintiffs refund

claim, the court assumes (without deciding) that plaintiffs refund claim was valid.

7 I.R.C. $ 7103 describes several situations in which the IRS may accept a bond. None

ofthese situations is applicable to the instant case. For example, pursuant to I.R.C. $ 7485(a),

taxpayers may file a bond to stay assessment and collection oftax deficiencies during the

pendency of an appeal of a United States Tax Court decision.

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Plaintiff asserts that the purported performance bonds he submitted with Forms l04l-ES are

eligible obligations, and thus constituted payment ofhis tax liabilities. Pl.'sResp.5. However,

plaintiffs reasoning is offpoint for two reasons. First, LR.C. $ 6603 provides that deposits must

be made in cash, and Revenue Procedure 2005-18 makes no allowance for posting a surety bond

(or any other tlpe of bond) in iieu of a check or money order. Second, even if a surety bond was

permissible, an "eligible obligation" equiva.lent must, among other requirements, "have a market

value that is equal to or greater than the amount of the required surety bond," with the market

value of the obligation being "determined by the Secretary of the Treaswy." 31 U.S.C.

$ 9303(aX2). The IRS, which is under the direction ofthe Secretary ofthe Treasury, has

effectively determined that the "bonds" submitted by plaintiffhave no market value.

Plaintiffs tax refund case thus boils down to the value of plaintiff s purported bonds,

which depend on the value of the Instrument. The court finds that the Instrument-and, by

extension, plaintiffs *bonds"-are entirely frivolous in nature. Frivolous claims include those

that describe "fantastic or delusional scenarios." Neitzke v. Williams, 490 U.S. 319, 328 (1989);

accord Taylor v. United States, 568 F. App'x 890, 891 (Fed. Cir. 2014) (unpublished decision)

("Frivolous complaints include those in which the factual allegations asserted are so unbelievable

that there is no need for an evidentiary hearing to determine their veracity."). plaintiffs

allegations conceming the Instrument-that a person can generate $850 billion simply by

"finding" a writing and affrxing the signature of a govemor who has been dead for over a

centrfy-amount to a quintessential frivolous claim.

In other words, the Instrument has no value and thus cannot be used as a vehicle to oav

tax liabilities. Plaintiff s claims are wholly meritless.

IV. CONCLUSION

The court has considered all of the parties' arguments. To the extent not discussed

herein, they are unpersuasive, without merit, or immaterial.

Plaintiffhas failed to demonstrate that he paid the tax liabilities at issue prior to initiating

the instant refund action. PlaintifF s claims before this court are so implausible and devoid of

merit as to not give rise to a federal contoversy. Therefore, the court GRANTS defendant's

motion to dismiss for lack of subject matter jurisdiction. The court also DENIES AS Moor all

other pending motions.

PlaintifFs complaint is DISMISSED wITHour PREJUDICE. No costs. The clerk is

directed to enter judgment accordingly.

IT IS SO ORDERED.

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