Court Opinion

ID: 4571763
Source: CourtListenerOpinion
Date Created: 2020-10-01 13:01:36.804879+00
Date Added: 2024-06-11T09:28:02.079319
License: Public Domain

In the United States Court of Federal Claims

 WILLIAM KOOPMANN, et al.,

                    Plaintiffs,
                                                            No. 09-cv-333 T
                         v.
                                                            Filed: September 30, 2020
 THE UNITED STATES,

                    Defendant.

William Koopmann, Lovettsville, Virginia, Plaintiff pro se

Jason Bergmann, U.S. Department of Justice, Tax Division, Court of Federal Claims Section,
Washington, D.C., for the Defendant.

                                  MEMORANDUM AND ORDER

       Plaintiff pro se, William Koopmann, seeks a tax refund in the amount of $2,416 which he

claims he overpaid as a result of the Internal Revenue Service’s (IRS) application of a special

timing rule under Internal Revenue Code (I.R.C.) § 3121(v)(2)(A) to the taxation of non-qualified

deferred compensation he received after he retired from United Airlines. See Complaint (ECF No.

1) (Compl.); Koopmann “Plaintiff Information Sheet” (ECF No. 61) (Pl. Info. Sheet) at 2;

Defendant’s Motion to Dismiss for lack of Subject Matter Jurisdiction with Respect to Plaintiff

Koopmann (Def. Mot.) Exhibit A (ECF No. 248-2) at 3; Plaintiff’s Response to Defendant’s

Motion to Dismiss Koopmann Dkt 248 (ECF No. 308) (Pl. Resp.) at 3-4. Mr. Koopmann’s claim

is nearly identical to that of other plaintiffs in the above-referenced case and a related case, Sofman

v. United States, No. 10-157, including that of co-plaintiff William C. Brashear, Jr., whose claim

was dismissed on September 30, 2020. See ECF No. 362.
       Defendant moved to dismiss Plaintiff’s complaint for lack of subject matter jurisdiction

pursuant to Rule 12(b)(1) of Rules of the United States Court of Federal Claims (Rule(s)). See

generally Def. Mot.; Defendant’s Reply in Support of Motion to Dismiss Claims by William

Koopmann for Lack of Subject Matter Jurisdiction (Def. Reply) (ECF No. 321). Defendant argues

that Mr. Koopmann's tax-refund claim is time-barred under I.R.C. § 6511, because Mr. Koopmann

did not file an administrative claim for tax refund either within three years of filing of the

applicable tax return or within two years of payment of the tax. Def. Mot. at 3-6.

       Mr. Koopmann argues that it is violative of the Due Process Clause of the Fifth Amendment

to apply a statute of limitations to bar a refund request when the event that triggered the purported

eligibility for that refund --- the discharge of United Airlines’ obligation to make payments towards

his non-qualified retirement benefits --- did not occur until long after the statute of limitations had

run. See generally Pl. Resp. at 3-4. Additionally, Mr. Koopmann continues to argue, despite the

Federal Circuit’s Balestra decision to the contrary, that the Treasury Department’s application of

the special timing rule, which does not does not allow for the contingency that if the employer

became bankrupt, an adjustment in the employee's tax would be made, violates Congress’ directive

as well as the Fifth Amendment’s Due Process Clause. See Pl. Resp. 3-6; but see Balestra v.

United States, 803 F.3d 1363, 1369-74 (Fed. Cir. 2015).

       This case was transferred to the undersigned judge on April 10, 2020. See ECF No. 135. 1

   1
     Defendant originally filed this motion on March 5, 2010. See ECF No. 48. After this case
was transferred to the undersigned judge on April 10, 2020, this Court held a status conference on
May 7, 2020, during which the Court asked Mr. Koopmann and Defendant whether they wished
to supplement their motion or response given the ten year passage of time since filing. Transcript
of May 7, 2020 Status Conference (ECF No. 219) (Transcript) at 13-22. During the conference,
Defendant’s counsel verified that the previously assigned judge did not rule on Defendant’s March
5, 2010 Motion to Dismiss. Id. Accordingly, the Court directed the Defendant to update its Motion
to Dismiss, originally filed on March 5, 2010, to reflect current law. Id.; see ECF No. 184.

                                                                                                     2
This Court has considered each of the parties’ filings and arguments in ruling on Defendant’s

Motion. For the reasons set forth below, this Court GRANTS Defendant’s Motion to Dismiss.

                                         BACKGROUND

       The Federal Insurance Contributions Act (FICA), I.R.C. §§ 3101–3128, establishes a tax

that is assessed by the Government based on wages paid to workers, and the money collected from

the FICA tax is used to fund the Social Security and Hospital Insurance (HI). Generally, wages

are received when they are paid by the employer to the employee, and wages are paid by the

employer when they are actually or constructively paid. See 26 C.F.R. § 31.3121(a)–2. The same

rule is generally true for FICA tax purposes. See Balestra v. United States, 803 F.3d 1363, 1366

(Fed. Cir. 2015) (citing 26 C.F.R. § 31.3121(v)(2)–1(a)(1) (the “special timing rule”)). However,

some wages are treated differently under the “special timing rule” for FICA tax purposes. Id. The

special timing rule applies to wages received from a non-qualified deferred compensation plan,

such as the plan at issue in the present action. See Balestra, 803 F.3d at 1366 (internal citations

and quotations omitted). 2 Under the “special timing rule” FICA tax is assessed only once, at the

later of either: (A) the date services are performed or (B) the date when there is no substantial risk

of forfeiture of the rights to such amount. See 26 C.F.R. § 31.3121(v)(2)–1(a)(1) (tracking I.R.C.

§ 3121(v)(2)(A)). There is “no substantial risk of forfeiture,” if

       an amount deferred is considered reasonably ascertainable on the first date on
       which the amount, form, and commencement date of the benefit payments
       attributable to the amount deferred are known, and the only actuarial or other
       assumptions regarding future events or circumstances needed to determine the
       amount deferred are interest and mortality.

2
  “Both Congress and the Treasury Department define ‘non-qualified deferred compensation
plan.’” See Balestra, 803 F.3d at 1366 (citing 26 U.S.C. § 3121(v)(2)(C) (Congress's definition);
26 C.F.R. § 31.3121(v)(2)–1(b) (Treasury's definition)). There is no dispute that the plan at issue
is such a non-qualified deferred compensation plan.

                                                                                                    3
26 C.F.R. § 31.3121(v)(2)–1(e)(4)(i)(B). The deferred benefits are taxed at their “present value,”

which is computed with reference to actuarial projections concerning life expectancy and a

discount rate which accounts for the time value of money but does not account for the risk of

employer default. See 26 C.F.R. § 31.3121(v)(2)-1(c)(2)(ii); Balestra, 803 F.3d at 1371.

       The underlying facts of this case are undisputed. In 2001, Mr. Koopmann retired from

United Airlines, and was covered by United Airlines’ non-qualified deferred compensation plan.

Def. Mot. Ex. A at 3-4. Pursuant to the special timing rule, Mr. Koopmann paid the present value

of his FICA taxes the year in which he retired. Def. Mot. Ex. A at 3-4. Mr. Koopmann received

benefits under United Airlines’ non-qualified deferred compensation plan from 2001 through

2006. Def. Mot. Ex. A at 3. The hospital insurance tax was 1.45% of an individual's “wages”

received with respect to employment. Def. Mot. Ex. A at 4.

       On December 9, 2002, two years after Plaintiff's retirement, United Airlines filed a Chapter

11 bankruptcy petition. Def. Ans. ⁋ 13. In 2006, the Seventh Circuit Court of Appeals approved

United Airlines’ reorganization plan. Def. Ans. ⁋ 13; see also In re UAL Corp., 468 F.3d 444 (7th

Cir. 2006). As a result of these proceedings, United Airlines’ obligation to pay Plaintiff’s deferred

compensation was discharged, with a portion of Mr. Koopmann’s benefits never having been paid.

See Def. Ex. A at 3; Pl. Resp. at 4, 5-6. Specifically, Mr. Koopmann paid tax on $415,025.91

worth of non-qualified deferred compensation, of which he received only $248,293. Def. Ex. A

at 3. He paid $6,017.88 of FICA tax on these benefits, which reflects the 1.45% HI tax rate applied

to the $415,025.91 present value of the benefits. Def. Mot. Ex. A at 3.

       As partial compensation for the bankruptcy discharge of Mr. Koopman’s retirement

benefits, United issued common stock to Mr. Koopmann, with the last issuance taking place on

April 24, 2007. Pl. Resp. at 4. Sometime thereafter, Mr. Koopmann filed an administrative claim

                                                                                                   4
for refund, on IRS Form 843, which he signed on August 5, 2007. See Def. Mot. Ex. A at 2; Pl.

Resp. at 4. Mr. Koopmann’s refund claim purported to relate to the tax period from “1/1/06 to

12/31/06.” Def. Mot. Ex. A at 2. However, attachments to the refund claim indicate that

Koopmann was seeking a refund of “withheld Medicare taxes on the entire amount in the [non-

qualified deferred compensation] plan in 2001.” Def. Mot. Ex. A at 3.

       On May 26, 2009, Mr. Koopmann filed a lawsuit in the United States Court of Federal

Claims against the United States seeking, inter alia, a refund of the FICA taxes paid by United

relating to his retirement. See generally Compl. The gravamen of Mr. Koopmann’s claim is that

because United Airlines withheld FICA tax from Mr. Koopmann based on a present value

calculation of his retirement benefits at the time of his retirement, Mr. Koopmann effectively paid

HI wage tax on wages he will never receive. See id.; Pl. Resp. at 3-4. Specifically, Mr. Koopmann

states that he should have paid the 1.45% HI tax on the present value of $248,393 (the amount he

received), which he alleges would entitle him to a $2,416 tax refund. See Pl. Info. Sheet at 2; Def.

Mot. Ex. A at 3.

                                          DISCUSSION

       Pursuant to Rules 12(b)(1) and 12(h)(3), this Court must dismiss claims that do not fall

within its subject-matter jurisdiction. When considering a motion to dismiss based on lack of

subject-matter jurisdiction, this Court accepts as true all uncontroverted factual allegations made

by the non-movant and draws all reasonable inferences in the light most favorable to that party.

See Estes Express Lines v. United States, 739 F.3d 689, 692 (Fed. Cir. 2014); Pixton v. B&B

Plastics, Inc., 291 F.3d 1324, 1326 (Fed. Cir. 2002). If a motion to dismiss for lack of subject-

matter jurisdiction challenges the truth of the jurisdictional facts alleged, the Court may consider

relevant evidence outside the complaint in resolving the dispute. See Reynolds v. Army & Airforce

                                                                                                  5
Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988) (citations omitted); Banks v. United States, 741

F.3d 1268, 1277 (Fed. Cir. 2014). This Court must liberally construe the filings of pro se plaintiffs.

See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Haines v. Kerner, 404 U.S. 519, 520-21 (1972).

However, a pro se plaintiff still has the burden of establishing this Court’s jurisdiction by a

preponderance of the evidence. Reynolds, 846 F.2d at 748; Curry v. United States, 787 F. App’x

720, 722 (2019) (citing Kelly v. Sec’y U.S. Dep’t of Labor, 812 F.2d 1378, 1380 (Fed. Cir. 1987)).

As with all other litigants, this Court must have jurisdiction over claims brought by pro se litigants.

See Reynolds, 846 F.2d at 748.

       In order to fall within the Tucker Act’s waiver of sovereign immunity, a plaintiff’s claim

for money damages against the United States must be based upon an express or implied contract,

or a money-mandating constitutional provision, statute, or regulation. See 28 U.S.C. §1491(a);

Mitchell, 463 U.S. at 216-18. In the present case, where Plaintiff seeks a refund of federal taxes,

he must meet the jurisdictional threshold for filing a refund claim under I.R.C. § 7422(a). See

United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4, 14 (2008); RadioShack, 566 F.3d

at 1360; see also Dumont v. United States, 345 F. App’x 586, 592 (Fed. Cir. 2009). “[I]t is a well-

established rule that a timely, sufficient claim for a[tax] refund is a jurisdictional prerequisite to a

refund suit.” Greene v. United States, 191 F.3d 1341, 1343 (Fed. Cir. 1999) (quoting Sun Chem.

Corp. v. United States, 698 F.2d 1203, 1206 (Fed. Cir. 1983)). 3 A federal tax refund claim must

3
  This Court recognizes the Federal Circuit’s recent commentary in Walby v. United States, 957
F.3d 1295, 1299–01 (Fed. Cir. 2020), regarding whether a court lacks subject matter jurisdiction
over a claim that fails to meet the requirements of I.R.C. §§ 7422(a) and 6511(a). Accordingly,
the Court clarifies that for the same reasons as set forth in this opinion, and only questions of law
are present, this Court alternatively converts Defendant’s motion to one for failure to state a claim
and sua sponte dismisses this complaint under Rule 12(b)(6). See, e.g., Walby, 957 F.3d at 1298,
1301 n.4 (citations omitted); Anaheim Gardens v. United States, 444 F.3d 1309, 1315 (Fed. Cir.
2006) (“The trial court may dismiss sua sponte under Rule 12(b)(6), provided that the pleadings
sufficiently evince a basis for that action.”);.
                                                                                                      6
be filed either: within three years of filing the return; or within two years of paying the tax,

whichever is later. See I.R.C. § 6511(a) (the general statute of limitations for filing a federal tax

refund claim). With respect to FICA tax, I.R.C. § 6513(c) provides for purposes of section 6511’s

limitations period (l) a return for any quarterly period ending in a calendar year is considered filed

on April 15 of the following year; and (2) a tax with respect to any such period is considered paid

on the following April 15, so long as it was actually paid before that date. See I.R.C. § 6513(c).

       Here, United Airlines filed its four quarterly returns for the year 2001 on June 11, 2001,

August 27, 2001, December 17, 2001, and April 1, 2002, respectively. See Def. Mot. Ex. C (ECF

No. 248-4) (Certified Transcripts of Account, United Airlines, Forms 941, First through Fourth

Quarters of 2001). Under Section 6513(c), all four of those returns were considered filed as of

April 15, 2002. Based on those filing dates, any claim for refund of FICA taxes paid in connection

with those returns was due no later than April 15, 2005, three years later. The IRS transcripts

further reflect that United Airlines made all applicable tax deposits for each of the four quarters no

later than March 2, 2001, April 27, 2001, July 27, 2001, and November 26, 2001, respectively.

Def. Mot. Ex. C. Under I.R.C. § 6513(c), all federal tax deposits were considered paid as of April

15, 2002. Based on United’s payment of the federal tax deposits, any refund claim for FICA taxes

paid in connection with those returns would be due no later than April 15, 2004, two years later.

However, for the fourth quarter of 2001, United Airlines did transfer some credits into the account

on various dates between February 28, 2002 and April 29, 2002. Def. Mot. Ex. C. If United

Airlines had used those credit transfers to satisfy Mr. Koopmann's FICA tax liability, then any

refund claim would be due no later than April 29, 2004, two years afterwards. See I.R.C. § 6511(a).

       While this Court sympathizes with Mr. Koopmann, and recognizes the long wait he has

had to endure for a ruling under prior case administration, this Court is bound by statutes as passed

                                                                                                     7
by Congress and by Federal Circuit precedent, both of which mandate dismissal of Mr.

Koopmann’s claim. Specifically, Mr. Koopmann's claim is unfortunately time-barred by I.R.C. §

6511(a) under any of these scenarios, because he did not file his refund claim until 2007. Def.

Mot. Ex. A at 2; see also Pl. Resp. at 4. Mr. Koopmann acknowledges that his refund was not

filed within three years from the time the return was filed or two years from the time the tax was

paid. Pl. Resp. at 3. However, Mr. Koopmann argues that I.R.C. § 6511(a) does not apply to

FICA taxes collected under the special timing rule. Pl. Mot. at 3-4. Moreover, he asserts that his

claim should be permitted because the taxing error upon which he basis his refund claim did not

occur until after the statute of limitations in I.R.C. § 6511(a) had expired. Id. He argues that a

statute of limitations that begins to run before an error is committed is violative of the Due Process

Clause of the Fifth Amendment because it would deprive him of a reasonable opportunity to seek

a refund. Id. These contentions are unavailing.

       First, as the Supreme Court has ruled, “the time limits for filing administrative refund

claims in I.R.C. § 6511” are “set forth in unusually emphatic form” and “apply to ‘any tax imposed

by this title.’” Clintwood Elkhorn, 553 U.S. at 7 (emphasis in original); see also RadioShack Corp.

v. United States, 566 F.3d 1358, 1362 (Fed. Cir. 2009) (rejecting an argument that unique

characteristics of the Communications Excise Tax, exempted the plaintiff’s claim for refund from

the requirements of section 6511). There is no statutory support for excluding claims arising out

of section 3121(v)(2) for the time limitations established by § 6511(a). Specifically, section

3121(v)(2)(A) states:

       Treatment of certain non-qualified deferred compensation plans.—
       (A) In general.--Any amount deferred under a non-qualified deferred compensation
       plan shall be taken into account for purposes of this chapter as of the later of--
       (i) when the services are performed, or
       (ii) when there is no substantial risk of forfeiture of the rights to such amount.

                                                                                                    8
       Section 3121(v)(2) of the I.R.C. is silent about the procedure for filing a claim for refund. 4

And section 3121(v)(2)(B)’s explicit dictate, that non-qualified deferred compensation plans are

to be taxed as wages only once, indicates that Congress intended to subject FICA taxes calculated

under “special timing rule” to the same refund process as other FICA taxes. Because there is no

textual support in the language of section 3121(v)(2) (or any other law) that would warrant an

application of a different statute of limitations, this Court must apply the timing requirements

established by section 6511(a).

       The period of limitations set forth in I.R.C. § 6511 is not subject to equitable tolling.

Brockamp v. United States, 519 U.S. 347, 350 (1997) superseded in part by statute, i.e., the Internal

Revenue Service Restructuring and Reform Act of 1998, Pub.L. No. 105–206, § 3202, 112 Stat.

685, 740–41, as recognized in Brosi v. Commissioner, 120 T.C. 5, 12 n. 6 (2003); see also Kingston

Prod. Corp. v. United States, 368 F.2d 281, 288 (Ct. Cl. 1966) (general principles of equity may

not override statutory requirements for timely filing of tax refund claims.); Boeri v. United States,

724 F.3d 1367, 1369 n.3 (Fed. Cir. 2013) (noting that “the Supreme Court has held that the

restrictions set forth in § 6511 for filing tax refund claims cannot be tolled for equitable reasons”);

Orlova v. United States, 347 F. App'x 578, 580–81 (Fed. Cir. 2009) (noting Congress has not made

the equitable tolling doctrine available to tax refund claims).

       Nor is there a “discovery rule” for section 6511(a) timing requirements. The fact “that a

taxpayer does not learn until after the limitations period has run that a tax was paid in error, and

that he or she has a ground upon which to claim a refund, does not operate to lift the statutory bar.”

United States v. Dalm, 494 U.S. 596, 609 n.7 (1990); see e.g., Knis v. United States, 10 F. App'x

4
  The Treasury Department regulation interpreting this section specifically states that refunds are
to be made in accordance with section 6511. See e.g., 26 C.F.R. § 31.3121(v)(2)-1 (e)(7) (Example
12); id. at (f)(2)(iii) & (4) (Example 2); id. at (g)(3), (4)(c), (5) (Example 4).

                                                                                                     9
942, 944 (Fed. Cir. 2001) (rejecting an argument that the statute of limitations should not be

applied to bar the taxpayer’s claim because she was unaware that her employer was responsible

for paying her social security taxes.); Lovett v. United States, 81 F.3d 143, 145 (Fed. Cir. 1996)

(rejecting an argument that the statute of limitations should be tolled because plaintiff was not

aware that the tax was wrongfully collected until after the statute of limitations.); Wadlington v.

United States, 176 F. App'x 105 (Fed. Cir. 2006) (rejecting an argument that taxpayer “did not

have an opportunity to file a timely refund because he was not aware before the expiration of the

statutory time period that he was entitled to the refund”).

        In fact, at least two other courts have rejected Mr. Koopmann’s statute of limitations

arguments. In Jackson v. Internal Revenue Service, No. 7:07-CV-168-H(2), 2008 WL 755916

(E.D.N.C. 2008), the district court held that a refund claim was untimely in circumstances virtually

identical to those here. There, a retired United pilot sought a refund of FICA taxes withheld on

“the present value of his entire non-qualified pension plan” under the special timing rule in §

3121(v)(2). Id. at *1. When that pilot retired, United paid FICA taxes totaling $8,239.05, based

on the present value of his entire non-qualified pension plan of $568,210.04. When United filed

for bankruptcy, that plaintiff’s pension plan was terminated, with plaintiff only receiving payments

totaling $137,611.60. Id. at *1. The pilot in that case filed a refund claim with the IRS on August

3, 2006, seeking a refund for the 2002 tax year of FICA tax paid on August 9, 2002. Id. The court

held that Mr. Jackson had not filed a timely administrative claim under § 6511 and dismissed his

suit as a result. Id.

        Likewise, in United States v. Bates, No. 8:12-cv-833-T, 2015 WL 7444285 (M.D. Fla.

2015), the district court entered a judgment in the Government’s favor in a suit under § 7405 to

recover an erroneous refund of tax. Mr. Bates, who was also a plaintiff in both Koopmann and

                                                                                                 10
Sofman, had filed an administrative refund claim on January 8, 2008, seeking a refund of FICA

taxes that United had paid in 2004. Id. at *1-2. An IRS Appeals Officer issued an erroneous

refund which the United States sued to recover. Id. at *2. The district court held that “the Office

of Appeals exceeded its authority when it authorized the refund . . . to the Bates because the request

for refund was filed outside the statutory limitations period provided by 26 U.S.C. § 6511.” Id. at

*5. In reaching its holding, the district court rejected the argument that “there was no basis to

request a refund until the bankruptcy court definitively ruled that Mr. Bates would no longer be

receiving any payments from United under the Plan,” because “the limitations period under section

6511 is not subject to equitable tolling.” Id. at *4.

       Further, the lack of an “equitable exception” to section 6511(a)’s time limitations does not

render the statute unconstitutional as applied to Mr. Koopmann, under the Due Process Clause or

any other constitutional provision. As the sovereign, the United States cannot be sued in its own

courts unless Congress explicitly authorizes such suit. See United States v. Sherwood, 312 U.S.

584, 586 (1941). “A necessary corollary of this rule is that when Congress attaches conditions to

legislation waiving the sovereign immunity of the United States, those conditions must be strictly

observed, and exceptions thereto are not to be lightly implied.” Block v. North Dakota ex rel. Bd.

of Univ. and Sch. Lands, 461 U.S. 273, 287 (1983). One of those conditions is the statute of

limitations, which reflects Congress's decision to waive sovereign immunity only if suit is brought

within a specific time period. See Walby v. United States, 957 F.3d 1295, 1299–301 (Fed. Cir.

2020). “Statutes of limitation ... are designed to promote justice by preventing surprises through

the revival of claims that have been allowed to slumber until evidence has been lost, memories

have faded, and witnesses have disappeared.” Order of R.R. Telegraphers v. Ry. Express Agency,

Inc., 321 U.S. 342, 348-49 (1944). Furthermore, “[a] time not unreasonably short for the beginning

                                                                                                   11
of actions may be fixed by the legislature, having in view particular conditions without violating

the due process clause.” Ky. Union Co. v. Kentucky, 219 U.S. 140, 156–57 (1911).

       This Court holds that the time requirements outlined in section 6511(a) are not

unreasonably short. It has long been recognized that “[i]t is essential to the honor and orderly

conduct of the government that its taxes should be promptly paid, and drawbacks speedily

adjusted” and that rules proscribing time limits for which tax refund suits can be brought are

“neither arbitrary nor unreasonable.” Cheatham v. United States, 92 U.S. 85, 89 (1875) (rejecting

argument that twelve-month statute of limitations cannot begin “to run until the cause of action

accrued”).

       Mr. Koopmann could have filed a claim for refund protesting the application of the special

timing rule. In this respect, § 6511(a) did not entirely deprive Mr. Koopmann of an opportunity

to file a refund. Further, there may have been good reason for Mr. Koopmann and other similarly

situated plaintiffs not to challenge the legality of the special timing rule. While it is true that

taxation of the compensation at its present value can sometimes work to an employee’s

disadvantage such as in the case of an employer going bankrupt, the special timing rule can also

work to an employee's advantage. Indeed, Mr. Koopmann may have potentially benefitted from

the application of the special timing rule in this case. Mr. Koopmann paid only a 1.45% Medicare

tax on the present value of his compensation in the 2001 tax year, for a total tax of $6,017.88. See

Def. Mot. Ex. A at 3. Had Mr. Koopmann paid FICA tax on the deferred compensation as he

received it in 2001 through 2006, and had his income fallen under the Social Security wage cap,

he would have paid both a 1.45% Medicare tax and a 6.2% Social Security tax on the compensation

he later received. See I.R.C. § 3101(a) (imposing “tax equal to 6.2 percent of the wages”).

                                                                                                 12
       This Court recognizes that the application of section 6511(a) can be viewed as operating

in an unfair manner where Mr. Koopmann had little practical reason to challenge the application

of the special timing rule until after the time period permitted to seek a refund had lapsed.

However, this Court is bound by Congress’ legislative actions and this Court declines to engage

in judicial engraftment of the federal statute at issue. Congress made a choice in enacting section

6511(a), and the result is a tradeoff between an administratively efficient tax refund scheme that

unfortunately sometimes leads to seemingly unfair results, and a scheme that would correct every

taxing error, but would be administratively inefficient. Congress has established a detailed refund

scheme that subjects complaining taxpayers to various requirements before they can bring suit.

Clintwood Elkhorn Min. Co., 553 U.S. at 11-12. This scheme was designed by Congress “to advise

the appropriate officials of the demands or claims intended to be asserted, so as to insure an orderly

administration of the revenue . . . to provide that refund claims are made promptly, and to allow

the IRS to avoid unnecessary litigation by correcting conceded errors.” Clintwood Elkhorn Min.

Co., 553 U.S. at 11–12 (internal citation and quotation omitted). “Even when the constitutionality

of a tax is challenged, taxing authorities do in fact have an ‘exceedingly strong interest in financial

stability.”’ Clintwood Elkhorn Min. Co., 553 U.S. at 11–12 (quoting McKesson Corp. v. Division

of Alcoholic Beverages and Tobacco, Fla. Dept. of Business Regulation, 496 U.S. 18, 37 (1990)).

As the Supreme Court has noted, Congress has carefully weighed these competing interests and

has decided “[t]he nature and potential magnitude of the administrative problem suggest that

Congress decided to pay the price of occasional unfairness in individual cases (penalizing a

taxpayer whose claim is unavoidably delayed) in order to maintain a more workable tax

enforcement system.” Brockamp, 519 U.S. at 352–53.

                                                                                                    13
        Finally, even if Mr. Koopmann’s claims are not time-barred, his arguments would

nevertheless fail, as the Federal Circuit has already rejected Mr. Koopmann’s arguments related to

the Treasury Department’s application of the special timing rule in the identical situation.

Balestra, 803 F.3d at 1369-1373 (ruling that Treasury regulation concerning special timing rule

was not invalid or inapplicable where United Airlines was in bankruptcy proceedings when the

present value of the deferred compensation was calculated). In Balestra, a retired United Airlines

pilot brought a suit seeking a FICA tax refund. Like the present case, Mr. Balestra paid FICA

taxes on retirement benefits he never received due to United Airlines’ bankruptcy. Mr. Balestra

challenged the Treasury Department’s application of the special timing rule, which taxed

plaintiff’s deferred compensation at the “present value” as of the date of plaintiff’s retirement but

also “prohibited consideration of an employer's financial condition (e.g., bankruptcy) in

calculating the amount deferred.” Balestra, 803 F.3d at 1365 (citing 26 C.F.R. § 31.3121(v)(2)–

1(c)(2)(ii)).

        The Federal Circuit rejected Mr. Balestra’s arguments that these regulations were invalid

stating, “[i]t may seem unfair in a specific instance such as this, but in balancing the desire for

simplicity against the ideal of ultimate comprehensiveness, the agency must be allowed a

reasonable degree of discretion.” Balestra, 803 F.3d at 1374 (holding that Treasury Department’s

regulation was due deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984)). Regardless of this Court’s views on Chevron deference, it is axiomatic

that this Court is bound by the Supreme Court’s decision and the Federal Circuit’s analysis and

holding in Balestra, 803 F.3d at 1365, and Mr. Koopmann has not provided a persuasive reason

why his case should be treated differently.

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                                        CONCLUSION

       For the reasons set forth above, this Court GRANTS Defendant’s Motion to Dismiss (ECF

No. 248) pursuant to Rule 12(b)(1) and 12(h)(3). Plaintiff’s Complaint is dismissed.

        IT IS SO ORDERED.

                                                               s/Eleni M. Roumel
                                                              ELENI M. ROUMEL
                                                                      Judge

September 30, 2020
Washington, D.C.

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