Court Opinion

ID: 4254997
Source: CourtListenerOpinion
Date Created: 2018-03-15 16:00:35.874281+00
Date Added: 2024-06-11T14:44:32.386088
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

           JIANGLIN ZHOU, JIE SHEN,
               Plaintiffs-Appellants

                           v.

                  UNITED STATES,
                  Defendant-Appellee
                ______________________

                      2018-1012
                ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00884-TCW, Judge Thomas C.
Wheeler.
               ______________________

               Decided: March 15, 2018
               ______________________

   JIANGLIN ZHOU, JIE SHEN, Palo Alto, CA, pro se.

    JOHN SCHUMANN, Tax Division, United States De-
partment of Justice, Washington, DC, for defendant-
appellee. Also represented by RICHARD E. ZUCKERMAN,
JOAN I. OPPENHEIMER.
                ______________________

Before LOURIE, O’MALLEY, and WALLACH, Circuit Judges.
2                                    ZHOU   v. UNITED STATES

PER CURIAM.
    Appellants Jianglin Zhou and Jie Shen (together,
“Appellants”) appeal a decision of the United States Court
of Federal Claims (“the Claims Court”) granting the
government’s motion for summary judgment. The Claims
Court concluded that there was no genuine issue of mate-
rial fact regarding whether Appellants had overpaid their
personal income taxes for 2006 and 2007. The Claims
Court concluded—as the government had argued—that
there was no overpayment. Zhou v. United States, 133
Fed. Cl. 322, 327 (2017). Because Appellants have not
met their burden to demonstrate an overpayment of
income taxes, we affirm.
                      BACKGROUND
    On their 2006 joint federal income tax return, Appel-
lants reported their total income as $262,850, and their
total tax due as $54,422. Appellants claimed income tax
withholding credits totaling $77,893. The Internal Reve-
nue Service (“IRS”) posted an account credit of $23,531
based on this reporting. But Appellants only had with-
held $57,425 in federal income tax; the remainder of the
amount Appellants claimed as federal tax withholding
credits consisted of their Social Security and Medicare tax
withholdings. The IRS reduced Appellants’ account credit
by $20,468 accordingly—the difference between the
withholding claimed by Appellants and the amount of
income tax actually withheld from Appellants’ paychecks.
    As to Appellants’ 2007 joint federal income tax return,
Appellants reported their total income as $267,217, and
their total tax due as $50,539. Appellants reported they
had $49,222 in federal income tax withholdings and that
they had made a $5,000 payment. Appellants requested
and received a refund of $3,683. Again, however, Appel-
lants included their Social Security and Medicare with-
holdings in the total reported withholding, but had only
withheld $34,696 from their wages. Upon discovery of
ZHOU   v. UNITED STATES                                   3

this discrepancy, the IRS reduced Appellants’ account
credit by $14,526.
    The IRS issued a notice of deficiency to Appellants in
2010, which included adjustments to various reported
expenses, contributions, credits, and deductions among
other items. Relevant to this appeal, the IRS listed a
$22,827 deficiency for 2006 and a $25,348 deficiency for
2007.
    Appellants filed a petition in the United States Tax
Court (“the Tax Court”) disputing the notice of deficiency.
The parties settled before trial and stipulated to amounts
that reflected Appellants’ tax deficiency and adjusted
credits. For the 2006 tax year, the Tax Court entered the
parties’ stipulation (“the Tax Court Decision”) that “there
is no deficiency in income tax due from, nor overpayment
due to, [Appellants] for the taxable year 2006.” Suppl.
App’x (“S.A.”) 200. The 2006 stipulation further specified
that Appellants had an “underpayment of tax” of $158.55.
S.A. 227. This stipulation also stated that “[i]t is hereby
stipulated that interest will be assessed as provided by
law.” S.A. 228. For the 2007 tax year, the Tax Court
entered the parties’ stipulation that “there is a deficiency
in income tax due from [Appellants] for the taxable year
2007 in the amount of $319.00.” S.A. 200. The Tax Court
Decision specified that interest due on any deficiency was
not included in the amount listed in the decision, and that
interest would be assessed on the deficiency owed by
Appellants. S.A. 201.
    The IRS credited Appellants’ account to reflect the
stipulation and Tax Court Decision. For 2006, the IRS
applied an adjustment of $16,051 and reversed penalties
and interest it had previously assessed, leaving a balance
due of $1,843.14. For 2007, the IRS applied an adjust-
ment of $6,943.78, and after a payment made by Appel-
lants, the IRS calculated a balance due of $10,089.17.
Appellants failed to pay these amounts, and the IRS
4                                    ZHOU   v. UNITED STATES

subsequently levied funds from Appellants’ Vanguard
brokerage account to satisfy the tax liabilities it imposed.
     Appellants then filed a complaint before the Claims
Court seeking the return of the levied funds and any
interest, in the amount of $12,929.25. The government
filed a motion for summary judgment, contending that the
Tax Court Decision resolved only Appellants’ tax deficien-
cies for 2006 and 2007, not their outstanding tax liability
for those years. Under the government’s view, the IRS
properly levied Appellants’ property to satisfy Appellants’
tax liability. Appellants argued in response that their tax
liabilities for 2006 and 2007 were resolved by the stipu-
lated decision, and they requested time for discovery into
various aspects of the Tax Court Decision. Appellants
also raised various constitutional due process claims.
     The Claims Court granted the government’s motion
for summary judgment. The court first determined that it
could not exercise jurisdiction over Appellants’ constitu-
tional claims as monetary damages are not available
under the Fourth and Fourteenth Amendments. Zhou,
133 Fed. Cl. at 325–26. The Claims Court also denied
Appellants’ request for discovery, concluding that the
stipulation and related Tax Court decision were unam-
biguous and therefore discovery would not affect the
court’s interpretation of these documents. Id. at 326.
    After review of the stipulation and decision, the
Claims Court concluded that the stipulated decision did
not resolve all of Appellants’ tax liability for 2006 and
2007. Id. at 323, 327. The Claims Court explained that
the stipulation and Tax Court Decision specified that
there was no deficiency in tax for 2006, and a deficiency of
$319.00 for 2007. Id. at 326. The Claims Court found
that this language determined Appellants’ deficiency
amounts for these tax years as well as the overpayment
amount for 2006. Id. But, the Claims Court explained
that the question before it was whether Appellants had
ZHOU   v. UNITED STATES                                  5

underpaid their taxes in these years—and the Claims
Court found the Tax Court Decision was silent on the
issue of whether Appellants had paid their outstanding
income tax liability. Id. Upon review of the stipulation
and tax transcripts, the Claims Court determined that the
agreed-upon amounts were credited to Appellants’ ac-
count. The Claims Court explained that Appellants
accrued interest and penalties related to their reporting
errors that the stipulation and Tax Court Decision did not
require the IRS to abate. Id. at 327. As Appellants were
liable for that debt, the Claims Court determined that the
IRS properly levied their brokerage account, as the IRS
was not required to abate any interest or penalties to be
compliant with the Tax Court Decision. Id. As Appel-
lants had not demonstrated that they overpaid their
taxes, the Claims Court determined there was no genuine
dispute as to any material fact in the case, and granted
summary judgment for the government. Id.
    Appellants timely appealed the Claims Court’s deci-
sion. The parties do not dispute that we have jurisdiction
under 28 U.S.C. § 1295(a)(3) to review Appellants’ chal-
lenge that the Claims Court erred in finding no genuine
dispute of material fact as to Appellants’ alleged over-
payment of their tax liability. 1
                          DISCUSSION
   This court reviews a decision of the Claims Court
granting summary judgment de novo. Ladd v. United

   1    To the extent Appellants challenge the Claims
Court’s dismissal of their constitutional claims on appeal,
the Tucker Act does not confer jurisdiction to the Claims
Court to consider these claims because they do not man-
date payment of money by the government. Brown v.
United States, 105 F.3d 621, 623 (Fed. Cir. 1997); LeBlanc
v. United States, 50 F.3d 1025, 1028 (Fed. Cir. 1995).
6                                    ZHOU   v. UNITED STATES

States, 713 F.3d 648, 651 (Fed. Cir. 2013). Rule 56(a) of
the Rules of the United States Court of Federal Claims
(“RCFC”) states that summary judgment is appropriate “if
the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment
as a matter of law.” We review the Claims Court’s “denial
of a discovery request . . . for an abuse of discretion.”
Freeman v. United States, 875 F.3d 623, 631 (Fed. Cir.
2017) (citing Rick’s Mushroom Serv., Inc. v. United States,
521 F.3d 1338, 1342 (Fed. Cir. 2008)).
    First, we conclude the Claims Court did not abuse its
discretion in denying Appellants’ request for discovery
under RCFC 56(d) in response to the government’s sum-
mary judgment motion. RCFC 56(d) permits a party
opposing summary judgment discovery when it “shows by
affidavit or declaration that, for specified reasons, it
cannot present facts essential to justify its opposition.”
Appellants requested six months for discovery related to
the parties’ stipulation and the Tax Court Decision.
     As the Claims Court has explained, “Rule 56(d) ‘pro-
vides for comparatively limited discovery for the purpose
of showing facts sufficient to withstand a summary judg-
ment motion.’” RQ Squared, LLC v. United States, 119
Fed. Cl. 751, 758 (2015) (quoting First Nat’l Bank of Ariz.
v. Cities Serv. Co., 391 U.S. 253, 265 (1968)). Accordingly,
“[t]he non-moving party will not be allowed to conduct
discovery that has no chance of leading to the denial of
summary judgment for the movant.” Id. (citing Simmons
Oil Corp. v. Tesoro Petroleum Corp., 86 F.3d 1138, 1144
(Fed. Cir. 1996)). Here, the Claims Court correctly found
that all material facts were already before the court, as it
had the stipulation, Tax Court Decision, and Appellants’
tax account information to review. These documents are
unambiguous, and in the absence of an ambiguity, the
court must rely on the language of the documents at issue
ZHOU   v. UNITED STATES                                  7

and may not consider extrinsic evidence. HRE, Inc. v.
United States, 142 F.3d 1274, 1276 (Fed. Cir. 1998). 2
    Second, we conclude the Claims Court did not err in
determining that Appellants have not established that
they overpaid their 2006 and 2007 taxes. “[A] taxpayer is
not entitled to a refund unless he has in fact overpaid the
particular tax.” Dysart v. United States, 169 Ct. Cl. 276,
281 (1965). Appellants bear the burden to establish that
they overpaid tax in a refund suit. Lewis v. Reynolds, 284
U.S. 281, 283 (1932).
    Appellants argue on appeal that the parties reached
an agreement on Appellants’ underpayment or overpay-
ment of taxes in the stipulation and Tax Court Decision,
but that the IRS failed to honor the agreement the parties
reached. The government contends that Appellants have
not shown they overpaid income taxes in 2006 and 2007,
based on the agreement the parties reached as document-
ed in the stipulation and Tax Court Decision.
    As noted, the Tax Court Decision states that Appel-
lants had no deficiency or overpayment of income tax for
2006, and that Appellants had a deficiency of $319.00 for
2007. S.A. 200. The term “deficiency” is defined by
statute as the amount by which the correct tax exceeds
the sum of the tax listed by the taxpayer on the return
and prior assessments, over any rebates. 26 U.S.C.

   2    Appellants also seek discovery under this rule to
support their argument that issue preclusion applies. But
issue preclusion cannot apply in this case. The Tax Court
proceedings determined the amount of Appellants’ income
tax liabilities, while the Claims Court considered whether
Appellants had overpaid on those tax liabilities. Discov-
ery cannot change the conclusion that these are different
issues and therefore the Tax Court Decision cannot trig-
ger a preclusive effect as to the Claims Court’s decision.
8                                     ZHOU   v. UNITED STATES

§ 6211(a) (2016). This definition does not include pay-
ments by the taxpayer, nor does it refer to a taxpayer’s
tax liability. See id. As the Tax Court has explained, “the
amount of a deficiency, whether at the time a notice of
deficiency is issued, or at the time a decision is entered by
[the Tax Court], turns not on what payments have been
applied to an account, but rather on what assessments
have been made with respect to that account.” Longino v.
Comm’r, 105 T.C.M. (CCH) 1491, 2013 WL 1104430, at
*25 (2013), aff’d, 593 F. App’x 965 (11th Cir. 2014).
“Payments are not included in determining or redetermin-
ing a deficiency, simply because they do not fit within the
definition of a deficiency.” Hillenbrand v. Comm’r, 84
T.C.M. (CCH) 643, 2002 WL 31779972, at *5 (2002)
(citing, inter alia, 26 U.S.C. § 6211(a)).
     The parties’ stipulation does not resolve whether Ap-
pellants actually paid their tax liabilities—it resolves
Appellants’ deficiencies for the years in question, and the
question of whether Appellants underpaid in 2006. And it
does not address the interest and penalties imposed on
Appellants’ tax underpayment prior to the stipulation
date. Interest and failure to pay penalties are imposed by
law whenever there has been an underpayment of tax for
any period of time. See 26 U.S.C. § 6601(a) (interest on a
tax underpayment runs from the date the tax was due
until the date the tax is paid); 26 U.S.C. § 6651 (failure to
file tax return or to pay tax mandates penalty).
    As the government explained in its briefing below,
and as the Claims Court correctly noted, the IRS abated
interest and penalties on the amount of the withholding
credit the parties stipulated should be credited to Appel-
lants. But, Appellants were still liable for the interest
and penalties from the portion of the withholding credit
they claimed on their return but to which they were not
entitled, per the parties’ stipulation. The Claims Court
did not err in concluding that the IRS properly levied
ZHOU   v. UNITED STATES                                 9

Appellants’ account to satisfy their remaining tax liabil-
ity.
                          CONCLUSION
   We have considered Appellants’ remaining arguments
and conclude that they are without merit. For the rea-
sons stated above, we affirm the Claims Court’s decision.
                          AFFIRMED