Court Opinion

ID: 6112139
Source: CourtListenerOpinion
Date Created: 2022-01-24 21:02:58.350248+00
Date Added: 2024-06-11T08:54:22.171298
License: Public Domain

Case: 21-1721   Document: 44     Page: 1   Filed: 01/05/2022

    United States Court of Appeals
       for the Federal Circuit
                 ______________________

     GEORGE P. BROWN, RUTH HUNT-BROWN,
               Plaintiffs-Appellants

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2021-1721
                 ______________________

     Appeal from the United States Court of Federal Claims
 in No. 1:19-cv-00848-LAS, Senior Judge Loren A. Smith.
                  ______________________

                Decided: January 5, 2022
                 ______________________

      TIFFANY MICHELLE HUNT, Barnes & Hunt, PLLC, Dal-
 las, TX, argued for plaintiffs-appellants.

    ISAAC B. ROSENBERG, Appellate Section, Tax Division,
 United States Department of Justice, Washington, DC, ar-
 gued for defendant-appellee. Also represented by BRUCE R.
 ELLISEN, DAVID A. HUBBERT.

    KEITH FOGG, Tax Clinic of the Legal Services Center of
 Harvard Law School, Jamaica Plain, MA, for amicus curiae
 The Center for Taxpayer Rights. Also represented by
 CARLTON M. SMITH, New York, NY.
Case: 21-1721    Document: 44      Page: 2    Filed: 01/05/2022

 2                                               BROWN   v. US

                  ______________________

      Before LOURIE, DYK, and STOLL, Circuit Judges.
     LOURIE, Circuit Judge.
     George P. Brown and Ruth Hunt-Brown appeal from
 the decision of the United States Court of Federal Claims
 (the “Claims Court”) dismissing their tax refund suit for
 lack of subject matter jurisdiction. See Brown v. U.S., 151
 Fed. Cl. 530 (2020) (“Decision”). While we disagree that the
 court lacked jurisdiction, we nonetheless affirm because
 the court was correct that the Browns failed to prove that
 their claim for refund was duly filed.
                        BACKGROUND
     The Browns are U.S. citizens and husband and wife. In
 the relevant tax years, they lived in Australia and Mr.
 Brown worked for the Raytheon Company.
     In October 2018, the Internal Revenue Service (“IRS”)
 received amended returns for the Browns for 2015 and
 2017. These returns were prepared and signed by John
 Anthony Castro, their attorney, but they were not accom-
 panied by any powers of attorney. The two returns claimed
 the Foreign Earned Income Exclusion.
      In January 2019, the Browns submitted a second
 amended return for 2015. Like their first amended return
 for that year, this return was prepared and signed by Mr.
 Castro and claimed the Foreign Earned Income Exclusion.
 It also did not append any powers of attorney. The returns
 sought refunds of $7,636 for 2015 and $5,061 for 2017.
     In April 2019, the Browns received a decision letter
 from the IRS disallowing the Browns’ refund claims for
 2015 and 2017. In this letter, the IRS explained that its
 records “show[ed] that, as an employee of Raytheon . . . liv-
 ing and working in Australia, [Mr. Brown] may have en-
 tered into a closing agreement . . . irrevocably waiving [the
Case: 21-1721    Document: 44      Page: 3    Filed: 01/05/2022

 BROWN   v. US                                              3

 Browns’] rights to claim the Foreign Earned Income [Ex-
 clusion] under [I.R.C.] section 911(a).” J.A. 350. In June
 2019, the Browns filed this refund suit in the Court of Fed-
 eral Claims. Under 26 U.S.C. § 6532 and § 7422(a), a suit
 may be brought in the Claims Court after an administra-
 tive claim has been filed and either the taxpayer waited six
 months before filing suit or the IRS took final action on the
 claim. Neither party seems to dispute that the Browns’
 claim was properly before the Claims Court if it was “duly
 filed.”
     The government filed an answer stating that the
 Browns’ allegations were largely conclusory and then
 moved to dismiss the suit for lack of subject matter juris-
 diction. The government argued that the Browns had not
 “duly filed” their administrative refund claims in accord-
 ance with 26 U.S.C. § 7422(a)’s mandate because they had
 not personally signed and verified their amended returns
 or properly authorized an agent to execute their returns.
      The Browns responded that even if they had not “duly
 filed” their refund clams, the IRS had waived the taxpayer
 signature and verification requirements by processing
 their refund claims, despite the claims’ defects. The
 Browns added that the signature and verification require-
 ments are regulatory conditions, which the Supreme Court
 has deemed waivable, instead of unwaivable statutory con-
 ditions.
     The Claims Court agreed with the government and dis-
 missed the Browns’ suit for lack of subject matter jurisdic-
 tion. Decision at 531–32. The court first found that the
 “duly filed” requirement in § 7422(a) is jurisdictional. Id.
 at 533–34. It then found that the Browns’ claims did not
 meet the requirements for a claim to be “duly filed.” Id.
    The Claims Court also rejected the Browns’ waiver ar-
 gument. Id. at 534–36. The court held that waiver does
 not apply to statutory requirements and that several
Case: 21-1721     Document: 44      Page: 4   Filed: 01/05/2022

 4                                               BROWN   v. US

 statutes require individual taxpayers to sign and verify
 their own refund claims. Id.
    Following the Claims Court’s judgment, the Browns
 timely appealed to this court. We have jurisdiction under
 28 U.S.C. § 1295(a)(3).
                         DISCUSSION
     We review the Claims Court’s legal determinations de
 novo and its factual findings for clear error. Palladian
 Partners, Inc. v. United States, 783 F.3d 1243, 1252 (Fed.
 Cir. 2015).
      The Browns argue that the Claims Court erred in find-
 ing § 7422(a) to be jurisdictional. They assert that
 § 7422(a) does not mention the term “jurisdiction” and that
 Congress has not made a clear statement that the signa-
 ture and verification requirements are jurisdictional. The
 government responds that the Supreme Court interpreted
 § 7422(a) as jurisdictional in United States v. Dalm, 494
 U.S. 596, 609–10 (1990). The government adds that even
 if the Browns are correct about § 7422(a) being non-juris-
 dictional, the Claims Court’s error is harmless and that the
 dismissal may simply be found pursuant to Rule 12(b)(6) of
 the Rules of the Court of Federal Claims (“RCFC”) for fail-
 ure to state a claim rather than Rule 12(b)(1) for lack of
 subject matter jurisdiction.
      We conclude that the Claims Court erred in holding
 that the Browns’ claim for refund was jurisdictional, but
 that it was harmless error because the Browns failed to
 meet the “duly filed” requirement. We address jurisdiction
 first.
     Section 7422(a) states that:
     No suit or proceeding shall be maintained . . . until
     a claim for refund . . . has been duly filed with the
     Secretary, according to the provisions of law in that
Case: 21-1721     Document: 44     Page: 5    Filed: 01/05/2022

 BROWN   v. US                                               5

     regard, and the regulations of the Secretary estab-
     lished in pursuance thereof.”
    The Supreme Court has interpreted the filing require-
 ment in § 7422(a) as a jurisdictional limitation in Dalm,
 494 U.S. at 609–10. It reasoned that filing for a tax refund
 within the time limits of the statute of limitations was ju-
 risdictional. Id. However, the adequacy of the filing, at
 issue here, is different from the fact of filing. The Browns
 did make a claim for refund within the statutory time pe-
 riod, and the Supreme Court in Dalm did not rule that
 meeting the requirement of being “duly filed” was jurisdic-
 tional.
    To be sure, this court has held that a taxpayer’s failure
 to comply with other § 7422(a) requirements (including
 those implemented by regulation) generally is jurisdic-
 tional. See, e.g., Stephens v. United States, 884 F.3d 1151,
 1156 (Fed. Cir. 2018); Waltner v. United States, 679 F.3d
 1329, 1333 (Fed. Cir. 2012). But that jurisdictional char-
 acterization cannot be reconciled with the Supreme Court’s
 decision in Lexmark International, Inc. v. Static Control
 Components, Inc., where the Court clarified that so-called
 “statutory standing” defects—i.e., whether a party can sue
 under a given statute—do not implicate a court’s subject
 matter jurisdiction. 572 U.S. 118, 128 & n.4 (2014).
     We conclude that the “duly filed” requirement in
 § 7422(a) is more akin to a claims-processing rule than a
 jurisdictional requirement. See Gillespie v. United States,
 670 F. App’x 393, 395 (7th Cir. 2016) (discussing that cer-
 tain prerequisites in § 7422(a) may be claims-processing
 rules rather than jurisdictional requirements). Thus, for
 the reasons below, we will affirm the Claims Court’s dis-
 missal of the Browns’ suit, but do so pursuant to RCFC
 12(b)(6) for failure to state a claim upon which relief can be
 granted rather than RCFC 12(b)(1) for lack of subject mat-
 ter jurisdiction.
Case: 21-1721    Document: 44      Page: 6    Filed: 01/05/2022

 6                                               BROWN   v. US

      Turning to the merits, we agree with the Claims
 Court’s conclusion that the Browns did not “duly file” their
 refund claim in accordance with § 7422(a). To be “duly
 filed” a claim:
     [M]ust set forth in detail each ground upon which
     a credit or refund is claimed and facts sufficient to
     apprise the Commissioner of the exact basis
     thereof. The statement of the grounds and
     facts must be verified by a written declaration that
     it is made under the penalties of perjury. A claim
     which does not comply with this paragraph will not
     be considered for any purpose as a claim for refund
     or credit.
 Treas. Reg. § 301.6402-2(b)(1) (emphasis added). The tax-
 payer signature requirement emphasized above may be ex-
 cepted “when a legal representative certifies the claim and
 attaches evidence of a valid power of attorney.” Gregory v.
 United States, 149 Fed. Cl. 719, 723 (2020). The Browns
 admit that they neither signed their refund claims nor ten-
 dered powers of attorney to permit their tax preparer to
 sign the claims on their behalf. Instead, the Browns argue
 that the signature and verification requirements are regu-
 latory provisions instead of statutory provisions and are
 therefore subject to waiver by the Secretary. The Browns
 further contend that the Secretary waived these require-
 ments in this instance.
     In Angelus Milling, the Supreme Court held that the
 IRS cannot waive “explicit statutory requirements” but
 that it may choose to waive regulatory requirements. An-
 gelus Milling Co. v. Commissioner, 325 U.S. 293, 296–97
 (1945). The Court reasoned that Congressional mandates,
 unlike regulations, “must be observed and are beyond the
 dispensing power of Treasury officials.” Id. at 296.
    Title 26, Section 6061(a) of the U.S. Code provides that
 “any return . . . or other document required to be made un-
 der any provision of the internal revenue laws or
Case: 21-1721    Document: 44     Page: 7    Filed: 01/05/2022

 BROWN   v. US                                             7

 regulations shall be signed in accordance with forms or reg-
 ulations prescribed by the Secretary.” Title 26, Section
 6065 of the U.S. Code similarly commands that “[e]xcept as
 otherwise provided by the Secretary, any return . . . or
 other document required to be made under any provision
 of the internal revenue laws or regulations shall contain or
 be verified by a written declaration that it is made under
 the penalties of perjury.”
     An income tax refund claim triggers these statutory
 commands because it is simultaneously a “return” and a
 “document required to be made . . . under the internal rev-
 enue laws or regulations.” Sections 6061(a) and 6065 thus
 impose a default rule that individual taxpayers must per-
 sonally sign and verify their income tax refund claims.
 Otherwise, the documents are invalid or of no legal effect.
 See Diamond v. United States, 107 Fed. Cl. 702, 705 (2012)
 (“To constitute a valid claim for refund, . . . the taxpayer
 must execute the return by signing it under penalty of per-
 jury.”), aff’d on other grounds, 530 F. App’x 943 (Fed. Cir.
 2013) (per curiam); accord Selgas v. Commissioner, 475
 F.3d 697, 700–01 (5th Cir. 2007) (“[T]he fact that [the re-
 turns] were unsigned deprives them of legal effect.”) (ap-
 plying §§ 6061(a) and 6065).
     To be sure, § 6061(a) gives the Secretary the authority
 to prescribe how individual taxpayers may satisfy the stat-
 ute’s requirement. Similarly, § 6065 gives the Secretary
 discretion to suspend the verification requirement in cer-
 tain cases. However, these statutes’ implementing regula-
 tions echo the statutory default rule. See Treas. Reg.
 §§ 1.6012-1(a)(5), 301.6402(e). They presumptively require
 individual taxpayers to execute their own refund claims
 and returns. See id. And, by regulation, the person who
 signs a return or other document must also verify it. See
 Treas. Reg. § 1.6065-1(a). Put differently, a taxpayer must
 satisfy the statutory default rule or else comply strictly
 with the implementing regulations. If they do neither, the
 document is effectively unsigned and unverified under
Case: 21-1721      Document: 44      Page: 8     Filed: 01/05/2022

 8                                                   BROWN   v. US

 §§ 6061(a) and 6065 and the taxpayer has not “duly filed”
 the refund claim.
     Because the taxpayer signature and verification re-
 quirements derive from statute, the IRS cannot waive
 those requirements. See Angelus Milling, 325 U.S. at 296.
 Therefore, the IRS had no authority to accept the Browns’
 improperly executed refund claims.
     Whatever other requirements may exist to render a re-
 turn “duly filed” we cannot say. We deal here only with the
 facts presented to us, relating to a return that is both un-
 signed by the taxpayers and not accompanied by a power
 of attorney.
      In the alternative, even if the taxpayer signature and
 verification requirements were regulatory provisions, the
 Browns wrongly presume that Angelus Milling’s waiver ap-
 plies to this case. Angelus Milling states that the waiver
 doctrine applies when (1) there is clear evidence that the
 Commissioner understood the claim that was made, even
 though there was a departure in form in the submission,
 (2) it is unmistakable that the Commissioner dispensed
 with the formal requirements and examined the claim, and
 (3) the Commissioner took action upon the claim. Angelus
 Milling, 325 U.S. at 297–98. Here, there is no evidence
 that the IRS knew that the Browns had not personally
 signed their refund claims or verified their accuracy under
 the penalty of perjury. Nothing in the Browns’ refund
 claims hinted that someone else had executed them, and
 Castro’s signature on the claims is in fact illegible, see, e.g.,
 J.A. 185. In addition, nothing in the April 2019 letter from
 the IRS to the Browns mentioned that the IRS was aware
 that the Browns had not personally signed or verified their
 refund claims. The record does not indicate that the Com-
 missioner dispensed with the requirements even though it
 examined the claim. Because prongs (1) and (2) of the An-
 gelus Milling waiver test are not satisfied, the Browns are
Case: 21-1721    Document: 44     Page: 9    Filed: 01/05/2022

 BROWN   v. US                                             9

 incorrect to presume that the signature and verification re-
 quirements were waived.
     In sum, the Claims Court properly dismissed the
 Browns’ suit because the Browns did not comply with the
 “duly filed” requirement in § 7422(a).
                        CONCLUSION
     We have considered the Browns’ remaining arguments,
 but we find them unpersuasive. Accordingly, the decision
 of the Claims Court is affirmed.
                        AFFIRMED