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

> District Court, E.D. New York · March 7, 2022

URL: https://www.frixlaw.com/law-library/cases/10307700

## Case

- **Court:** District Court, E.D. New York
- **Decided:** March 7, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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## How later opinions describe it (automated extraction)

- noting that the court will consider “expert affidavits submitted in response to Defendant’s fact-based motion to dismiss”
- 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

## Opinion text

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.

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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.

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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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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10307700. Public record. Not legal advice.