Special Touch Home Care Services, Inc. v. United States

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

SPECIAL TOUCH HOME CARE SERVICES, Inc.,

Plaintiff, ‘MEMORANDUM & ORDER

20-CV-3051 (NGG) (TAM)

-against-

UNITED STATES OF AMERICA,

Defendant.

NICHOLAS G. GARAUFIS, United States District Judge.

Plaintiff Special Touch Home Care Services, Inc, seeks the refund

of a federal tax penalty that was erroneously or illegally collected

and the refund of which was erroneously or illegally denied by

Defendant United States. Defendant moved to dismiss the Com-

plaint in its entirety for lack of subject matter jurisdiction

pursuant to Federal Rule of Civil Procedure 12(h)(3). (Def.’s

Mem. in Supp. of Mot. to Dismiss (“Mot.”) (Dkt. 18-2).) For the

reasons explained below, this court lacks subject matter jurisdic-

tion over this dispute, and Defendant’s motion to dismiss the

Complaint is GRANTED.

I, BACKGROUND

Plaintiff is a New York corporation with its principal place of busi-

ness in Brooklyn, New York. (Compl. (Dkt. 1) 4 5.) Since

approximately 1990, Joseph Liberman, Plaintiffs controller, has

been responsible for handling Plaintiffs taxes, including but not

limited to, the transmission of W-2 information to the Internal

Revenue Service (“IRS”). Gd. €{ 7-8.) There were no known in-

cidents related to Mr. Liberman’s performance of his duties from

1990 to 2014, including the period during which Mr. Liberman

underwent treatment for prostate cancer in 2013, Ud. {| 9-10.)

In late 2015, Mr. Liberman “became seriously ill,” and in early

2016, he was diagnosed with colon and prostate cancer. (See

Nov. 10, 2017 Ltr. to IRS (Dkt. 18-5) at ECF p. 2).}! During his

treatment, Mr. Liberman continued to work for Plaintiff, but was

forced “to work reduced hours and be totally out of the office

routinely,” Ud.) Unbeknownst to Plaintiff, Mr. Liberman failed to

file Plaintiffs Forms W-2 and W-3 for the years 2015 and 2016.

(Compl. 16-17.)

On July 31, 2017, Plaintiff received correspondence from the IRS

proposing a penalty, at which point Plaintiff became aware of its

failure to file information tax returns for 2015 and 2016. Ud.

16-17, 22; see Nov. 10, 2017 Ltr. to IRS.) After becoming aware

of this failure, Plaintiff promptly provided the IRS with the delin-

quent tax forms. (Compl. 4 18.) On November 10, 2017, Plaintiff

sent a letter to the IRS requesting an abatement of the proposed

penalty, but the IRS denied Plaintiffs request in a letter dated

February 2, 2018, explaining that Plaintiff had not shown rea-

sonable cause or due diligence. (See Pl.’s Resp. in Opp. to Mot. to

Dismiss (“Opp.”) at 2; Feb. 2, 2018 Ltr. to Pl. (Dkt. 18-5) at ECF

p. 4.) The IRS letter provided that in order to appeal the decision,

Plaintiff would need to provide certain facts and evidence along

with a declaration that the submission is true “under penalties of

perjury.” (Feb. 2, 2018 Ltr. to Pl.) The letter further informed

Plaintiff that submitting a Power of Attorney (“Form 2848”) was

required if Plaintiff wished to be represented by another party

before the IRS. (id.) Finally, the letter notified Plaintiff that in-

stead of appealing, Plaintiff could pay the penalty and file a claim

for a refund. (Id.)

| A court may consider “affidavits and other materials beyond the plead-

ings” to resolve a motion to dismiss for lack of subject matter jurisdiction.

Gil vy. Bernard & Yam, L.L.P., No. 17-GV-942 (NGG) (PK), 2018 WL

443339, at *4 (E.D.N.Y. Jan. 16, 2018) (quoting J.S. ex rel. N.S. v. Attica

Cent. Sch., 386 F.3d 107, 110 (2d Cir. 2004)); see also Morrison v. Natl

Australia Bank, 547 F.3d 167, 170 (2d Gir. 2008). Additionally, the court

has determined that this is a fact-based motion for summary judgment,

which warrants “consideration of evidence outside of the pleadings.” See

Amidax Trading Grp. v. §.W.LE.T. SCRE, 671 F.3d 140, 145 (2d Cir.

2011); see also infra section II for further discussion.

On February 19, 2018, the IRS assessed a penalty against Plain-

tiff in the amount of $451,000 pursuant to 26 U.S.C. § 6721.

(Pl’s IRS Account Transcript (Dkt. 18-2) at ECF p. 13.) To sat-

isfy the penalty, the IRS offset $443,188.36 from Plaintiffs

account for employment taxes for the first quarter of 2018 on

April 30, 2018 and $11,805.98 from Plaintiffs account for em-

ployment taxes for the second quarter of 2018 on July 31, 2018.

(id.; Mot. at 1.)%

On July 1, 2019, Plaintiffs attorney, Hana M. Boruchov, filed a

Claim for Refund and Request for Abatement (“Form 843”) with

the IRS’s Philadelphia Service Center, requesting a refund in the

amount of the 2015 penalty. (See Compl. { 27; July 1, 2019 IRS

Submission (Dkt. 18-2) at ECF pp. 14-15.) The Form 843 was

signed on July 1, 2018 by Ms. Boruchov as Plaintiffs “return pre-

parer” in the section designated “Paid Preparer Use Only.” The

signature line in this section does not state that it is “under pen-

alties of perjury.” (See July 1, 2019 IRS Submission at ECF p. 15)

The accompanying Form 2848 was signed by one of Plaintiffs

employees on January 14, 2019, but it does not specifically au-

thorize representation with respect to Form 843. Cd. at ECF p.

18.) Further, the employee did not check two boxes that would

have authorized Ms. Burochov to sign both a Form 843 and file

tax returns on behalf of the Plaintiff. (See id. at ECF pp. 16-18.)*

2 As Plaintiff notes in the Complaint, the IRS assessed a separate penalty

against Plaintiff for the failure to file 2016 tax returns. (Compl. § 19.) How-

ever, the IRS found that Plaintiff made a timely demonstration of

reasonable cause and abated the penalty, so it is not in dispute.

3 The total damages amount of $454,944.34 includes a $3,994.34 interest

fee that was “charged for late payment” on top of the $451,000 penalty.

(See Pl’s IRS Account Transcript.)

4 The box on Part I, Line 4 of Form 2848 allows a taxpayer to grant “specific

use” power of attorney, which is required to authorize a representative to

sign Form 843 on behalf of a taxpayer, and Part I, Line 5 authorizes a rep-

resentative to sign returns on Plaintiffs behalf. (July 1, 2019 IRS

Submission at ECF pp. 16-18.)

The IRS has not yet responded to the merits of Plaintiffs Form

843. (See Mot. at 4; 2019-21 Ltrs. to Pl. (Dkt. 18-5) at ECF pp. 8-

12.) Instead, on December 18, 2019 and February 12, 2020, the

IRS notified Plaintiff that the IRS had not “completed all the pro-

cessing necessary for a complete response,” and that it would

contact Plaintiff again within 60 days. (See Compl. { 28; 2019-21

Ltrs. to Pl. at ECF pp. 8-9.) After Plaintiff initiated this suit, the

IRS sent nearly identical letters on October 7, 2020, January 21,

2021, and March 17, 2021. (2019-21 Ltrs, to Pl. at ECF pp. 10-

12.)

On July 8, 2020, Plaintiff filed its Complaint pursuant to 26

U.S.C. § 7422, seeking a refund of the 2015 penalty in the

amount of $454,994.34 plus prejudgment and post-judgment in-

terest. (See Compl. 44 1, 32, 35). On December 10, 2020, Plaintiff

filed an amended Form 843, which was signed by Plaintiffs au-

thorized representative under penalties of perjury. (See Opp. at 3

& Ex. D.)

Il. LEGAL STANDARD

“It is axiomatic that federal courts are courts of limited jurisdic-

tion and may not decide cases over which they lack subject

matter jurisdiction.” Lyndonville Sav. Bank & Tr. v. Lussier, 211

F.3d 697, 700 (2d Cir. 2000).° Rule 12(h)(3) of the Federal

Rules of Civil Procedure provides that a court must dismiss an

action at any point if it determines that it lacks subject matter

jurisdiction.

A. Sovereign Immunity

In suits against the United States, sovereign immunity operates

as a limitation on subject matter jurisdiction. The doctrine of sov-

ereign immunity provides that the United States may not be sued

in the absence of its consent, and “the existence of consent is a

prerequisite for jurisdiction.” Roberts v. LR.S., 468 F. Supp. 2d

644, 649 (S.D.N.Y. 2006), affd, 297 F. App’x 63 (2d Cir. 2008).

5 When quoting cases, and unless otherwise noted, all citations and quota-

tion marks are omitted, and all alterations are adopted.

Thus, “plaintiff bears the burden of establishing that [plaintiffs]

claims fall within an applicable waiver” of sovereign immunity.

Makarova v, United States, 201 F.3d 110, 113 (2d Cir. 2000). Un-

der 28 U.S.C. § 1346(a)(1), taxpayers are permitted to bring

lawsuits in district courts for refunds against the United States.

Flora v. United States, 362 U.S. 145, 148-49 (1960). However,

“[d]espite its spacious terms, § 1346(a)(1) must be read in con-

formity with other statutory provisions which qualify a taxpayer’s

tight to bring a refund suit upon compliance with certain condi-

tions.” United States v. Dalm, 494 U.S. 596, 601 (1990).

There are two principal statutory limitations on a taxpayer’s abil-

ity to file a refund suit under § 1346(a) (1). First, under 18 U.S.C.

§ 7422(a), a taxpayer may not file suit “until a claim for refund

or credit has been duly filed with the Secretary, according to the

provisions of law in that regard, and the regulations of the Sec-

retary established in pursuance thereof.” See United States v.

Williams, 514 U.S. 527, 533 & n.5 (1995) (emphasis added). Sec-

ond, taxpayers may not file suit “before the expiration of 6

months from the date of filing the claim.” 26 U.S.C. § 6532(a) (1).

B. Consideration of Evidence

Courts in the Second Circuit have distinguished between facial

and fact-based motions to dismiss for lack of subject matter juris-

diction. See Carter v. HealthPort Techs., LLC, 822 F.3d 47, 56-57

(2d Cir. 2016). A facial motion is “based solely on the allegations

of the complaint or the complaint and exhibits attached to it,”

whereas a fact-based motion “proffer[s] evidence beyond the

Pleading.” Id. On a facial motion, “[t]he task of the district court

is to determine whether the Pleading alleges facts that affirma-

tively and plausibly suggest that the plaintiff has standing to sue.”

Id. at 56. On a fact-based motion, “[ilf the defendant’s evidence

exposes a potential jurisdictional defect, the plaintiffs will need

to come forward with evidence of their own, though they are en-

titled to rely on the allegations in the Pleading if the evidence

proffered by the defendant ... does not contradict plausible alle-

gations that are themselves sufficient to show standing.” Med-

Plus, Inc. v. Am, Casualty Co. of Reading, PA, No. 16-CV-2985

(NGG) (JO), 2017 WL 3393824, at *4 (E.D.N.Y. Aug. 4, 2017).

Where the moving party’s “extrinsic evidence ...is material and

controverted,” Carter, 822 F.3d at 57, “the court will analyze De-

fendants Rule 12(b){1) motion as a factual attack on

jurisdiction, to be assessed based on all material evidence.” Med-

Plus, Inc., 2017 WL 3393824, at *4; see also Citizens for Resp. &

Ethics in Wash. v. Trump, 953 F.3d 178, 185 1.5 (2d Cir. 2019)

(noting that the court will consider “expert affidavits submitted

in response to Defendant’s fact-based motion to dismiss”).

The Complaint alleged a timely and duly filed Form 843, as re-

quired to secure jurisdiction under 26 U.S.C. § 7422(a). (Compl.

| 27, 32-34.) However, Defendant’s motion to dismiss, which

attached a copy of Plaintiffs Form 843, exposed a potential juris-

dictional defect: Plaintiffs submission to the IRS had not in fact

been duly filed. Thus, this court will consider the evidence prof-

fered in the parties’ briefing in addition to the Complaint to

decide the motion.

Accordingly, to survive this motion to dismiss, Plaintiff bears the

burden of “proving by a preponderance of the evidence that sub-

ject matter jurisdiction exists,” Katz v. Donna Karan Co., L.L.C.,

872 F.3d 114, 120 (2d Cir. 2017), specifically that Plaintiff “duly

filed” a claim for a refund with the IRS at least six months prior

to filing this action.

HI. DISCUSSION

Defendant alleges that Plaintiff did not comply with § 7422(a)’s

requirement that a claim for refund be duly filed with the IRS

and thus there was no waiver of Defendant’s sovereign immun-

ity. Plaintiff responds that (i) the amended Form 843 cures the

previous procedural defect; (ii) the court has jurisdiction based

on the informal claim doctrine; and (iii) dismissing the complaint

would frustrate efficient judicial administration. In response, De-

fendant contends that (i) the amended Form 843 does not cure

the previous defects; and (ii) the informal claim doctrine is inap-

plicable, as it applies to issues of timeliness, not validity.

A. Validity of Plaintiffs Original Submission

Prior to filing a suit for the recovery of “erroneously or unlawfully

assessed” taxes, a “taxpayer must comply with the tax refund

scheme established in the Code.” United States v. Clintwood

Elkhorn Min. Co., 553 U.S. 1, 4 (2008). The fundamental require-

ment is that the refund claim was first “duly filed” with the IRS.

id. at 8. The Treasury Regulations and case law further elucidate

on what constitutes a “duly filed” refund claim.

The claim must “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,” and this “statement of

the grounds and facts must be verified by a written declaration

that it was made under the penalties of perjury.” 26 C.F.R. 8

301.6402-2(b)(1) (emphasis added). This regulation makes

clear that a claim without a sufficient statement of grounds

and facts “will not be considered for any purpose as a claim for

refund or credit.” Id. In addition, “the claim for refund required

by § 7422{a) must be filed by the taxpayer claiming such refund.”

Hartwick Coll. v. United States, 801 F.2d 608, 612 (2d Cir. 1986)

(citing 26 C.F.R. § 301.6402-2(a)(1)). However, the regulations

permit an agent to file the refund on a taxpayer's behalf. Id. In

cases where the agent did not file the taxpayer’s tax returns in

the first instance, “a power of attorney must accompany the

claim.” 26 C.E.R. § 301.6402-2(e).

Plaintiffs original submission allegedly contains two primary de-

fects. First, Form 843 was not signed “under penalties of perjury”

as required by Treasury Regulations. Second, even if Ms. Bo-

ruchov, the attorney who signed the Form 843 as the preparer

had signed under penalties of perjury, she was not authorized to

represent the Plaintiff because Form 2848 also contained several

deficiencies. Courts that have considered similar defects have

found that they are fatal to the submission of a “duly filed” Form

843 and thus insufficient to confer jurisdiction.

Zz

1. Form 843

Courts that have considered the “penalties of perjury” require-

ment have consistently reiterated that it is a required component

of a tax refund request under the Treasury Regulations. See, e.g.,

Dubay v. Scott, No. 98-CV-0029 (DJS), 1998 WL 1035439, at

*3 (D. Conn. Sept. 30, 1998); Bartley v. United States, No. 95-

CV-404 (RWW) 1995 WL 835398, at *2 (E.D. Wis. Dec. 20,

1995) (signing a refund “under penalty of perjury” is one of “sev-

eral requirements imposed by statute and regulation”); Howell v.

Comm’, T.C. Summ. Op. 2015-45, at *3 (2015) (noting that

Form 843 “requires the applicant’s signature under penalties of

perjury”). This requirement stems from the IRS’s need to “enforce

directly against a rogue taxpayer.” Dixon v. United States, 147

Fed. Cl 469, 476 n.5 (Fed. Cl. 2020); cf Borgeson v. United States,

757 F.2d 1071, 1073 (10th Gir. 1985) (“The perjury charge

based on a false return has been deemed one of the principal

sanctions available to assure that honest returns are filed.”).

In cases where taxpayers have failed to sign Form 843 under pen-

alties of perjury, courts have found that the submission was not

valid and thus does not confer subject matter jurisdiction. See,

e.g., Anuforo v. Comm’r, No, 05-CR-2156 (IRT) (FLN), 2007

WL 2695805, at *3 (D. Minn. Sept. 10, 2007) (“[U]nsigned

Forms 843 are not valid claim forms” and thus “cannot satisfy the

jurisdictional prerequisite”); Overton v. United States, 48 F.

App’x 295, 300 (10th Cir. 2002) (affirming dismissal for lack

of subject matter jurisdiction where “refund claim was not ver-

ified by a written declaration that it [was] made under the

penalties of perjury”).

Similarly, where an attorney has filed Form 843 on behalf of a

taxpayer, courts have maintained that Form 843 must be signed

under penalties of perjury. In Trackhter v. United States, tax-

payer’s counsel executed Form 843 and attached Form 2848. No.

20-CV-02282 (SI), 2020 WL 3971621, at *2 (N.D. Cal. July 14,

2020). However, like Ms. Boruchov, the attorney did not sign un-

der penalties of perjury, which the court referred to as a “critical

omission.” Id, The court was clear that “[t]he power of attorney

form does not fulfill the penalty of perjury requirement.” Jd. Sim-

ilarly, in Giacchi v. U.S. Dep’t of Treasury, the court concluded that

Form 843 was invalid where “the attached letter from [Plaintiffs]

counsel include[d] a description of the potential grounds for a

refund,” but was not “verified by a written declaration that is

made under the penalties of perjury.” No. 18-CV-2332 (EGS),

2019 WL 398931, at *7 (E.D. Pa. Jan. 31, 2019). This conforms

with the way that courts have approached other tax forms, such

as tax returns. See Gregory v. United States, 149 Fed. Cl. 719, 724

(Fed. C]. 2020) (“The regulations allow for a person other than

the taxpayer to sign under penalties of perjury only if a valid

Form 2848 accompanies the return.”); Dixon, 147 Fed. Cl. at 475

(finding a lack of subject matter jurisdiction where “refund

claims did not comply with the IRS’s requirements that every tax

return be signed under penalties of perjury by either the taxpayer

or his agent”).

The Treasury Regulations are clear about the requirement that

Form 843 is filed under penalties of perjury. The court sees no

reason why that requirement should differ where an attorney

signs Form 843 on behalf of a taxpayer. Here, neither Plaintiff

nor Plaintiffs attorney signed the Form 843 under penalties of

perjury. Thus, Plaintiffs original Form 843 was not “duly filed.”

2. Form 2848

Even if Plaintiff's attorney had properly executed Form 843 un-

der penalties of perjury, Defendant alleges that due to several

deficiencies in Form 2848, the form did not vest counsel with

authority to sign Form 843 on Plaintiffs behalf.

The Treasury Regulations provide that a Form 843 prepared by

an attorney must be accompanied by Form 2848. See 26 C.F.R. 8

301.6402-2(e). Further, courts have found that the omission of a

valid Form 2848 is fatal to a claim for a refund submitted by

counsel, Favell v. United States, 22 Cl. Ct. 571, 577-78 (Fed. Cl.

1991) (dismissing claim based on “failure to file valid powers of

attorney”); Rewwer v. United States, No. 20-CV-495 (MRB), 2022

WL 203508, at *3 (S.D. Ohio Jan. 24, 2022) (referring to the

failure to attach Form 2848 as a “deficiency”).

Defendant alleges three deficiencies in Plaintiffs Form 2848.

First, Form 2848 “does not specifically authorize Ms. Boruchov

or any other representative to file a claim for refund or to repre-

sent plaintiff before the IRS with respect to a Form 843.” (Mot.

at 2.) Second, the form “does not check the box on Part I, line 4

for a one-time specific use power of attorney.” (d.) Third, the

form “does not check the box on Part I, line 5, that, if checked,

would indicate that Ms. Boruchov or any other representative

was authorized to sign returns on the plaintiffs behalf.” Ud. at 2-

3.)

Courts tend to require strict compliance with the requirements of

Form 2848. In Wilson v. United States, a case with nearly identical

facts as here, plaintiffs attorney signed Form 843 on behalf of

the taxpayer in the “Paid Preparer Use” section of a Form 843

and left the “under penalties of perjury” signature line blank. No.

18-CV-408 (RHH), 2019 WL 988600, at *1 (Fed. Cl. Feb. 27,

2019). Plaintiffs Form 2848 also stated that the attorney was

“authorized to perform acts regarding the following tax matters:

income tax (Form 1040), civil penalties (Forms 3520 and 3520-

A), and matters relating to foreign banks and financial account

reports,” Id. at *2. The court found that the Form 2848 was inva-

lid because “Plaintiff has not demonstrated by a preponderance

of the evidence that Form 2848 is a broad authorization that ex-

tends to the signing of a claim for refund.” Id. at 5. Similarly, in

Dixon, the Court of Federal Claims found that plaintiffs attor-

ney’s failure to check the box to authorize a representative to

“sion return” in Part I, Line 5a of Form 2848 rendered it invalid.

147 Fed. Cl. at 472, 475. While the Form 2848 in Dixon was at-

tached to a tax return, rather than a refund claim, which is

specifically enumerated in one of the checkboxes in Line 5a, both

documents must be signed under penalties of perjury and are

likely beyond the scope of the acts explicitly authorized by the

form, which are “agreements, consents, or similar documents.”

© The court declined to “address the propriety of his signature on the re-

fund claim” since it found that Form 2848 was insufficient. Wilson, 2019

WL 988600, at *5.

10

Here, Plaintiffs Form 2848 provides that it covers civil penalties

related to Forms 1099, W-2, and W-3, but does not include spe-

cific authorization to file Form 843. Given the lack of specific

authorization, the court finds that Plaintiffs Form 2848 could not

authorize Plaintiffs attorney to file a refund claim on Plaintiffs

behalf.

B. Alternative Jurisdictional Bases

Although Plaintiff alleged in the Complaint that it had duly filed

Form 843 as required by 26 U.S.C. § 7422(a), in response to this

motion, Plaintiff concedes that the claim was not signed under

penalties of perjury. (See Opp. at 2.) Instead, Plaintiff offers two

alternative bases for this court’s jurisdiction over the tax refund

claim. First, the claim is still valid under the informal notice doc-

trine,’ and second, the amended claim relates back to the

original claim, in effect, curing the original claim.

1. Informal Notice Doctrine Based on the November

10, 2017 Letter

Defendant argues that notwithstanding any alleged deficiencies

in the original Form 843, this court has jurisdiction pursuant to

the informal claim doctrine. In United States v. Kales, the Su-

preme Court recognized the informal claim doctrine:

[A] notice fairly advising the Commissioner of

the nature of the taxpayer’s claim, which the

Commissioner could reject because too general

or because it does not comply with formal re-

quirements of the statute and regulations, will

nevertheless be treated as a claim where formal

defects and lack of specificity have been remedied

by amendment filed after the lapse of the statutory

period.

314 U.S. 186, 194 (1941) (emphasis added). Since Kales,

“lt]he Supreme Court and lower courts have consistently held

7 Courts refer to the informal notice doctrine and informal claim doctrine

interchangeably.

11

that an informal claim is sufficient to satisfy the statutory prereq-

uisite of ... 8 7422(a).” United States v. Forma, 42. F.3d 759, 767

n.13 (2d Cir. 1994). There are three components of an informal

claim for a refund: (1) “provide the IRS notice of the taxpayer’s

claim to a refund”; (2) “describe the legal and factual basis for

the refund”; and (3) “have a written component.” AmBase Corp.

vy, United States, 731 F.3d 109, 118 (2d Cir. 2013).°

Plaintiff asserts that the November 10, 2017 letter to the IRS

meets these three criteria without further explanation. (Opp. at

4.) The November 2017 letter requests that “due to the extenu-

ating circumstances...the penalties for the late filing be

removed.” (Nov. 10, 2017 Ltr. to IRS.) The letter, submitted prior

to the assessment of the penalty on February 19, 2018, requests

the abatement of an unpaid penalty, not a refund. United States

y. Factors’ & Fin. Co., 288 U.S. 89, 92 (1933). Courts have

strictly construed the requirement that an informal claim put the

IRS on notice that a refund is sought. See, e.g., Simon y. Doe, 463

F. Supp. 2d 466, 469-70 (S.D.N.Y. 2006) (finding that where

plaintiffs “accountant wrote only to request an abatement of

penalties, which [plaintiff] had not paid at that time,” the IRS did

not have informal notice that plaintiff sought a refund); UKP

Holdings, Inc. v. United States, No. 15-CV-6431 (RJD) (RLM),

2018 WL 1701918, at *6 (E.D.N.Y. Apr. 6, 2018) (“It is not

enough that the IRS has information from which it might deduce

that the taxpayer is entitled to, or might desire, a refund.”); Meult

v. United States, No. 11-CV-1044 (RDR), 2011 WL 2650355, at

*4n.2 (D. Kan. July 6, 2011) (The word ‘refund’ is never men-

tioned in the letter. The court does not consider this a formal or

informal refund claim.”); Hollie v. Comm’r, 73 T.C. 1198, 1214

(T.C. 1980) (“[O]n its face, the protest fails to satisfy the most

® Defendant suggests that one of the deficiencies of the November 10,

2017 letter is that it was not signed under penalties of perjury. It does not

appear that this is a requirement under the informal claim doctrine, and in

fact, in a recent Eastern District of California case, the court explicitly held

that this was not required for an informal claim. See Johnson v. United

States, No. 19-CV-01561 (TLN) (JDP), 2021 WL 4480937, at *2-3 (E.D.

Cal. Sept. 30, 2021).

12

basic requirement of a claim—advising the Commissioner that a

refund is being sought.”).

Consistent with this strict requirement, courts within the Second

Circuit have found informal communications to constitute infor-

mal claims only where the communication clearly conveyed that

a refund was sought. See, e.g., McMillan v. LR.S., No, 09-CV-577

(JG} (LB), 2010 WL 3804895, at *1 (E.D.N.Y. Sept. 23, 2010)

(“Although [plaintiff] did not use the word ‘refund,’ the only rea-

sonable construction of his letter is as a request for refunds.”);

Weisman v. Comm’, 103 F. Supp. 2d 621, 628 (E.D.N.Y. 2000)

(holding that a cover letter and 1040 that “referenced the 1990

tax year and indicated that a refund was due” constituted an in-

formal claim); Porto v. Seltzman, No. 89-CV-7945 (JFK), 1990

WL 26293, at *3 (S.D.N.Y. Mar. 5, 1990) (“Although his state-

ment... does not specify with clarity his reasons for challenging

the penalties, it does communicate to the IRS that a right is being

asserted with respect to an overpayment of tax.”). Here, Plain-

tiffs letter request did not contain a request for a refund; indeed,

at this point, there was no refund to request. Accordingly, the

November 10, 2017 letter cannot be considered an informal

claim for a refund.

Even if the court were to construe the November 10, 2017 letter

as an informal claim for a refund rather than as a request for

abatement, filing an informal claim is not a substitute for a valid

claim. Instead, it “arrest[s] the running of the statute of limita-

tions,” UKP Holdings, Inc, 2018 WL 1701918, at *4, by

“allow[ing] certain less formal written claims to constitute notice

within the statute of limitations.” Magnone v. United States, 733

F, Supp. 613, 618 (S.D.N.Y. 1089).? For example, in McMillan,

? In cases where the IRS has “fully investigat[ed] the merits of a noncon-

forming claims,” courts have found that the IRS has “waive[d] its right to

perfection of an informal refund claim, just as it can waive its right to

strict compliance with other tax procedure regulations.” Weisman, 103 F.

Supp. 2d at 628 n.12. However, in the instant action, the IRS did not

fully investigate the claim, and repeatedly notified Plaintiff that pro-

cessing was not yet complete.

13

the court held that taxpayer’s letter sent before the statutory pe-

riod had lapsed was an informal claim, which protected the

formal claim filed after the statute of limitations had run. 2010

WL 3804895, at *1. Similarly, in Gallo v. U.S. Dep’t of Treasury,

the court held that plaintiffs letter to the IRS “can be viewed as

an informal claim,” but there was no subject matter jurisdiction

because “[p]laintiff has not perfected his informal refund claim.”

950 F. Supp 1246, 1249-50 (S.D.N.Y. 1997).

A taxpayer is required to file a refund claim within two years

from the time the penalty was paid. See 26 U.S.C. 88 6511(a),

6671(a) & 6721. Here, the alleged informal claim was filed No-

vember 10, 2017, and the penalty was fully paid as of July 31,

2018. Thus, the statute of limitations terminated on July 31,

2020. On December 10, 2020, Plaintiff submitted its amended

Form 843. Assuming the validity of the amended Form 843, or-

dinarily, this would perfect Plaintiffs informal claim under the

informal claim doctrine. However, the challenge in this case is

that the amended Form 843 was filed after Plaintiff initiated the

instant litigation on July 8, 2020. And once a claim is filed in

federal court, the IRS’s jurisdiction terminates. See Computervi-

sion Corp. v. United States, 445 F.3d 1355, 1372 (Fed. Cir.

2006);"° Hall v. United States, 148 Fed. Cl. 371, 379 (Fed. CL

2020) (holding “[t]his suit was brought before the [informal]

claim was perfected, and termination of the IRS’s jurisdiction pre-

cludes any future attempt to do so”); BNSF Ry. Co. v. United

0 The Gomputervision court properly distinguishes St. Joseph Lead Co, v.

United States, 299 F.2d 348 (2d Cir. 1962), which held that the amend-

ment of a tax claim filed after the initiation of a lawsuit in district court

was permitted under the germaneness doctrine. In St. Joseph Lead Co., the

original refund claim was valid, as distinguished from Plaintiffs initial

Form 843, and taxpayer sought to amend its complaint, so the question

was whether “the Commissioner in determining the merits of the original

claim would necessarily have ascertained the facts on which the amend-

ment is based.” Id. at 351. As the Computerviston court noted, this rule

would be “untenable” in the context of the informal claim doctrine “since

it would allow amendments submitted after filing the refund suit to extend

the limitations period indefinitely.” Computervision Corp., 445 F.3d at

1372.

14

States, 745 F.3d 774, 785 (5th Cir, 2014) (“[Where courts have

applied the informal claim doctrine, ‘the taxpayers followed their

informal submissions with proper formal claims before initiating

litigation.” (quoting Greene-Thapedi v. United States, 549 13d —

530, 533 (7th Cir. 2008))); cf. 5 U.S.C. § 901 (“Any case referred

to... defense in the courts, the function of decision whether and

in what manner to prosecute, or to defend, or to compromise, or

to appeal, or to abandon prosecution or defense, now exercised

by any agency or officer, is transferred to the Department of Jus-

tice.”).

In a similar case, where the taxpayer filed an unsigned Form 843,

filed a suit in federal court, and then submitted a valid Form 843,

the court found that “[t]he law does not confer subject matter

jurisdiction... when the suit is commenced prior to the filing of

valid Forms 843.” Anuforo, 2007 WL 2695805, at *3, The same

reasoning applies here. The November 10, 2017 letter did not

notify the IRS that Plaintiff was requesting a refund; and even if

it did, Plaintiff did not perfect its informal claim prior to filing

this suit. Thus, the informal claim doctrine does not confer sub-

ject matter jurisdiction upon this court.

2. Relation Back to the Original Form 843

Plaintiff further contends that this court has jurisdiction since the

amended Form 843 relates back to the original Form 843. At the

time of the Complaint, six months had passed since the original

Form 843 was filed in July 2019, Plaintiff reasons that because

the amended Form 843 filed in December 2020 relates back to

the original Form 843, the amended Form 843 necessarily fulfills

the requirement that a taxpayer wait six months after filing a re-

fund claim to file a lawsuit. Plaintiff asks this court to find that

the amended Form 843 filed with the IRS after the Complaint

retroactively vests jurisdiction in this court."

1 Plaintiff further asserts that Form 843 may be amended at any time until

it is statutorily disallowed by the IRS. (See Opp. at 5.) However, whether a

taxpayer is permitted to amend its claim with the IRS is a separate question

15

However, none of the cases cited by Plaintiff deal with an original

complaint lacking subject matter jurisdiction. Instead, Plaintiffs

cited cases stand for the proposition that a plaintiff may amend

a complaint only to the extent that the IRS or some other coun-

terparty would have been on notice of the amendments based on

the original complaint. For example, in a related case raised by

Defendant, Joseph Lead Co. v. United States, the Second Circuit

affirmed the district court’s award of summary judgment to the

taxpayer where the taxpayer filed a refund claim and subse-

quently amended it after filing the lawsuit since “computation

errors ...resulted in a substantial understatement of the basic

figures.” 190 F. Supp. 637, 639 (S.D.N.Y. 1960), affd, 299 F.2d

348 (2d Cir. 1962). The court found that the amendment did not

constitute a new claim since it did “not amount, under the rules

of pleading in actions at law, to an alteration of the cause of ac-

tion and would not require the Commissioner to make a new and

different inquiry than that which he was called upon to make.”

Id. However, there was no question as to whether the original

claim was duly filed such that subject matter jurisdiction was

proper in federal court. Thus, the relation back doctrine allows

for tolling of the statute of limitation for certain amendments

where jurisdiction was originally proper; it does not retroactively

vest courts with subject matter jurisdiction.

Furthermore, jurisdiction must exist at the time of the complaint,

and a plaintiff is not permitted to amend his or her complaint in

order “to create subject matter jurisdiction where none already

exists over the original complaint.” Hirsch v. Qingdao Orien Com.

Equip. Co,, Ltd., No. 12-CV-952 (RRM), 2015 WL 1014352, at

*73 n.25 (E.D.N.Y. Mar. 6, 2015); see also Pressroom Unions-

Printers League Income Sec. Fund v. Cont’l Assur. Co,, 700 F.2d

889, 893 (2d Cir. 1983) (declining to “create jurisdiction retro-

actively where none existed”). Thus, even if Plaintiffs amended

Form 843 did “relate back” to the original Form 843, it would

not retroactively vest jurisdiction in this court.

from whether the amended Form 843 can retroactively create jurisdiction

in this court.

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C. Judicial Efficiency

Finally, Plaintiff contends that dismissing the Complaint would

frustrate efficient judicial administration because Plaintiff could

have filed a new case as early as June 2021, after six months had

passed since the amended Form 843 filing in December 2020.

But the IRS has the right to insist upon strict compliance with its

regulations. See Gallo, 950 F. Supp at 1249 (citing Angelus Milling

Co. v. Comm’r, 325 U.S. 293, 296 (1945)). As the Supreme Court

explained in United States v. Felt & Tarrant Mfg. Co., “[t]he ne-

cessity for filing a claim such as the statute requires is not

dispensed with because the claim may be rejected.” 283 U.S, 269,

273 (1931). Furthermore, “[t]he law requires that the IRS be

given an opportunity to rule on a claim for refund,” which is pre-

cisely why “no claim may be reviewed in a court until the IRS has

either denied the claim or failed to act for six months after the

claim was [duly] filed.” Crocker v. United States, 563 F. Supp 496,

500 n.3 (S.D.N.Y. 1983).

Federal Rule of Civil Procedure 12(h)(3) requires that a federal

court dismiss a case that lacks subject matter jurisdiction, and

this requirement is not trumped by considerations of judicial ef-

ficiency. Since it is “not within the judicial province to read out

of the statute the requirement of its words,” the court declines to

find subject matter jurisdiction on the basis of judicial efficiency.

Felt & Tarrant Mfg. Co., 283 U.S, at 273.

17

IV. CONCLUSION

For the reasons explained above, all claims against Defendant are

DISMISSED without prejudice.

SO ORDERED.

Dated: Brooklyn, New York

March / , 2022

s/Nicholas G. Garaufis

NICHOLAS G. GARAUFIS (

‘United States District Judg □

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