Attia v. United States

In the United States Court of Federal Claims

ANIS ATTIA,

Plaintiff,

v. Nos. 20-1801C; 21-1203C

(Filed March 27, 2025)

THE UNITED STATES,

Defendant.

Anis Attia, West New York, NJ, plaintiff, pro se.

Brittney M. Welch, Civil Division, United States Department of Justice, Washington, DC, for de-

fendant.

OPINION AND ORDER

Granting Mr. Attia’s Motion for Judgment on the Administrative Record on the Federal

Tax Gross-Up; Granting the Government’s Motions to Dismiss and for Judgment on the

Administrative Record on Other Issues; and Remanding the Federal Tax Gross-Up Issue

SILFEN, Judge.

Anis Attia, proceeding without an attorney, has long alleged problems with his pay as a

servicemember in the U.S. Army, arguing that he was underpaid for his language skills and for

other work he performed. The government has acknowledged errors and adjusted Mr. Attia’s pay

at least three times, giving him lump sums when it has found a pay discrepancy, including on

remand from this court in the two pending (now consolidated) cases. Mr. Attia now alleges that

the government owes him compensation to make him whole for extra taxes he has paid because of

receiving back pay as a lump sum rather than receiving it gradually over the years that he should

have been paid. In other words, he alleges that he sustained a higher federal and state tax burden

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overall because of receiving lump-sum payments, and he would like a so-called tax gross-up to

make up for that additional burden. He also alleges that the government owes him for tax-related

penalties he incurred based on his lump-sum back pay and owes him further back pay.

Mr. Attia filed two complaints, addressing some overlapping legal issues but distinct facts.

The government moves to dismiss both complaints for lack of subject-matter jurisdiction—arguing

that Mr. Attia fails to allege a legal basis to support his tax gross-up claims—and for failure to

state a claim—arguing that he has been paid, so his other claims are moot. The government also

moves for judgment on the administrative record, and Mr. Attia cross-moves, with both parties

raising related issues and arguments. The court determines that Mr. Attia is entitled to a gross-up

for federal taxes paid on his lump-sum back-pay payments, but he is not entitled to a gross-up for

state taxes, damages for other expenses related to lump-sum payments he received, or any further

back pay. Mr. Attia is therefore entitled to judgment on the administrative record on his federal

tax gross-up claims. The government is entitled to judgment on the administrative record or to

dismissal of the remaining claims. The court will therefore grant in part and deny in part each

party’s motions and will remand the case for a federal tax gross-up calculation and payment.

I. Background

Mr. Attia served as an infantryman in the U.S. Army between 2001 and 2009. AR337-38.1

In 2009, Mr. Attia was involuntarily discharged. AR338. Mr. Attia appealed his discharge to the

Army Board for Correction of Military Records. In 2012, the board granted Mr. Attia partial relief,

voided the discharge, ordered that the Army reinstate Mr. Attia, and awarded him full back pay

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The administrative record is available at ECF Nos. 50, 50-1, and 50-2 in Case No. 20-1801. Mr.

Attia has two pending cases that were recently consolidated, and Case No. 20-1801 is the lead

case. Thus, all references to the electronic case filing numbers, unless otherwise noted, refer to

filings in Case No. 20-1801.

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for the time after he was improperly discharged. Id. The Army reinstated Mr. Attia to active duty

in 2013. AR339. In 2014, the Defense Finance and Accounting Service (DFAS) calculated the

money the Army owed Mr. Attia for his constructive service between 2009 and 2013 and issued

him a payment. AR21-22. Mr. Attia served in the Army until 2015, when he was medically retired

due to permanent disability. AR334; AR336.

In 2020, Mr. Attia filed a complaint in this court alleging that he was entitled to additional

payments for his constructive service between 2009, when he was improperly discharged, and

2013, when he was reinstated. ECF No. 1. He alleged that (1) the back-pay award was incom-

plete—for example, his housing allowance and cost of living adjustment were not based on the

correct location—and (2) the award was improperly reported to the Internal Revenue Service and

Social Security Administration as a lump sum of wages received in 2014 rather than as distributed

over his four-year constructive service period—which meant that he paid more in taxes than if he

had been paid smaller sums each year. Id. at 8-9 [¶¶19-22], 13-14 [¶¶32-34], 18-19 [¶¶44-45]. In

2021, the court remanded the case to DFAS to “review and consider Plaintiff’s entitlement to ad-

ditional compensation and issue a comprehensive determination concerning the amounts he is

owed.” ECF No. 26 at 1. In 2022, following its review, DFAS issued a final decision correcting

Mr. Attia’s award and giving him approximately $80,000 in relief. See ECF No. 37-1. DFAS did

not address Mr. Attia’s tax-related claims because they were “not claims for military pay and al-

lowances.” Id. at 6. Mr. Attia amended his complaint, now alleging that DFAS owes him a tax

gross-up to make up for the higher taxes he had to pay as a result of receiving a lump sum in 2014.

ECF No. 45 at 4-7 [¶¶10-15].

In 2021, Mr. Attia filed a separate complaint in this court alleging that he was entitled to

payments from the time of his reinstatement in the Army in 2013 through his medical discharge in

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2015. Mr. Attia alleged that he should have received foreign language proficiency bonus payments

based on his Arabic and French language skills. See Case No. 21-1203, ECF No. 1. The court

remanded that case to the board, which determined that Mr. Attia was “eligible for [language pro-

ficiency] payments.” Case No. 21-1203, ECF Nos. 10, 27-1 at 22. Mr. Attia then stated in a joint

status report that he believed only his tax-burden-related claims remained unresolved. Case No.

21-1203, ECF No. 28. The court stayed the case until Mr. Attia received payment. Case No. 21-

1203, ECF No. 29. But after conducting an audit of its payment corrections, DFAS determined

that Mr. Attia owed DFAS a debt for an overpayment for certain language proficiencies. Case No.

21-1203, ECF Nos. 44, 51. The court again stayed the case until Mr. Attia received a corrected

2022 W-2 from DFAS. Case No. 21-1203, ECF No. 52. After receiving the corrected 2022 W-2,

Mr. Attia filed an amended complaint alleging that he was entitled to additional language profi-

ciency pay and to a tax gross-up for the language proficiency back pay. See Case No. 21-1203,

ECF No. 56. DFAS then investigated Mr. Attia’s language proficiency underpayment claims,

found that his language proficiency payment for French was an underpayment, and gave Mr. Attia

additional language proficiency back pay. Case No. 21-1203, ECF Nos. 57, 59; ECF No. 81 at Ex.

A.

After both cases returned to the court, the court consolidated Mr. Attia’s 2020 and 2021

cases. Given DFAS’s corrective action and Mr. Attia’s amendments to his complaints, the court

determined that the remaining issues in both cases share a related set of facts and common legal

questions that justified consolidation. ECF No. 74.

II. Discussion

The government moves to dismiss Mr. Attia’s complaints under rules 12(b)(1) and 12(b)(6)

of the Rules of the Court of Federal Claims (RCFC). ECF Nos. 56, 81. The government argues

that the court should dismiss Mr. Attia’s claims (1) for lack of jurisdiction because he fails to allege

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a legal basis to support his tax gross-up claims; and (2) for failure to state a claim because he fails

to plead any payment entitlement claims after DFAS gave him all the back pay he is owed for his

constructive service and language proficiency benefits. ECF No. 81. The government also moves

for judgment on the administrative record in Case No. 20-1801 for the same reasons. ECF No. 56.

Mr. Attia waives several claims but cross-moves for judgment on the administrative record on his

tax gross-up claims. ECF No. 72.

This court’s jurisdiction is primarily defined by the Tucker Act, which provides the court

with exclusive jurisdiction to decide specific types of monetary claims against the United States.

See 28 U.S.C. § 1491(a)(1); see also Kanemoto v. Reno, 41 F.3d 641, 644 (Fed. Cir. 1994). The

Tucker Act gives this court jurisdiction to decide “actions brought pursuant to money-mandating

statutes, regulations, executive orders, or constitutional provisions.” Roth v. United States, 378

F.3d 1371, 1384 (Fed. Cir. 2004); see 28 U.S.C. § 1491(a)(1) (“The United States Court of Federal

Claims shall have jurisdiction to render judgment upon any claim against the United States

founded … upon the Constitution, or any Act of Congress or any regulation of an executive de-

partment, or upon any express or implied contracts.”).

The Military Pay Act, 37 U.S.C. § 204, which Mr. Attia invokes (ECF No. 45 at 2 [¶3]), is

a money-mandating statute within the court’s Tucker Act jurisdiction. Martinez v. United States,

333 F.3d 1295, 1303 (Fed. Cir. 2003) (en banc). The Military Pay Act “confers on an officer the

right to the pay of the rank he was appointed to up until he is properly separated from the service.”

Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir. 1997). The Military Pay Act thus “provides

for suit in [the Court of Federal Claims] when the military, in violation of the Constitution, a stat-

ute, or a regulation, has denied military pay.” Antonellis v. United States, 723 F.3d 1328, 1331

(Fed. Cir. 2013) (quotation marks omitted). This court’s jurisdiction includes requests for back

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pay. Martinez, 333 F.3d at 1303. The damages available extend to “military back pay and ancillary

relief.” Holley, 124 F.3d at 1466.

On a motion to dismiss for lack of subject-matter jurisdiction under this court’s rule

12(b)(1), the “court must accept as true all undisputed facts asserted in the plaintiff’s complaint

and draw all reasonable inferences in favor of the plaintiff.” Trusted Integration, Inc. v. United

States, 659 F.3d 1159, 1163 (Fed. Cir. 2011). If the court determines that it lacks subject-matter

jurisdiction, it must dismiss the action. RCFC 12(b)(1), (h)(3); see Steel Co. v. Citizens for a Better

Environment, 523 U.S. 83, 94 (1998). A “plaintiff bears the burden of establishing subject matter

jurisdiction by a preponderance of the evidence.” Estes Express Lines v. United States, 739 F.3d

689, 692 (Fed. Cir. 2014).

On a motion to dismiss for failure to state a claim under this court’s rule 12(b)(6), the court

must accept well-pleaded factual allegations as true and draw all reasonable inferences in the plain-

tiff’s favor. Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). The court is not re-

quired to accept the parties’ legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “A complaint must be dismissed

under Rule 12(b)(6) when the facts asserted do not give rise to a legal remedy, or do not elevate a

claim for relief to the realm of plausibility.” Laguna Hermosa Corp. v. United States, 671 F.3d

1284, 1288 (Fed. Cir. 2012) (citing Lindsay, 295 F.3d at 1257; Iqbal, 556 U.S. at 679).

Under this court’s rule 52.1, parties may file motions for judgment on the administrative

record for the court to assess “whether the administrative body, given all disputed and undisputed

facts appearing in the record, acted in a manner that complied with the legal standards governing

the decision under review.” Supreme Foodservice GmbH v. United States, 109 Fed. Cl. 369, 382

(2013). “RCFC [52.1] requires [this court] … to make factual findings from the record evidence

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as if it were conducting a trial on the record.” Bannum, Inc. v. United States, 404 F.3d 1346, 1353-

54 (Fed. Cir. 2005). The court then determines “whether, given all the disputed and undisputed

facts, a party has met its burden of proof based on the evidence in the record.” A&D Fire Prot.,

Inc. v. United States, 72 Fed. Cl. 126, 131 (2006).

When reviewing a military pay case, this court reviews the merits of military personnel

decisions “under the same standard as any other agency action.” Metz v. United States, 466 F.3d

991, 998 (Fed. Cir. 2006). The court determines whether the decision was “arbitrary, capricious,

unsupported by substantial evidence, or contrary to law.” Id. The court reviews a legal determina-

tion to decide whether it is “not in accordance with the law.” Moberly v. Secretary of Health and

Human Services, 592 F.3d 1315, 1321 (Fed. Cir. 2010) (quotation marks omitted). Whether a tax

gross-up is available under the applicable statute is a legal question; the decision whether to pro-

vide that gross-up in a particular case is discretionary, based on the facts of the case. See generally

Home Savings of America v. United States, 399 F.3d 1341, 1346-47, 1356 (Fed. Cir. 2005) (dis-

cussing standards of review and later explaining that the “Court of Federal Claims properly ad-

justed the damages award to reflect tax consequences”); Eshelman v. Agere Systems, Inc., 554 F.3d

426, 442-43 (holding “that a district court may award a prevailing employee an additional sum of

money to compensate for the increased tax burden a back pay award may create”).

This court has traditionally held the pleadings of a pro se plaintiff to a less stringent stand-

ard than those of a litigant represented by counsel. Hughes v. Rowe, 449 U.S. 5, 9 (1980) (stating

that pro se complaints “however inartfully pleaded are held to less stringent standards than formal

pleadings drafted by lawyers” (marks omitted)). The court has therefore exercised its discretion in

this case to examine the pleadings and record “to see if [the pro se] plaintiff has a cause of action

somewhere displayed.” Ruderer v. United States, 188 Ct. Cl. 456, 468 (1969).

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A. Mr. Attia is entitled to a federal tax gross-up on his income and language pro-

ficiency back pay

Mr. Attia states that he paid higher income taxes in the years that DFAS paid him lump

sums of back pay for wages and language proficiency bonuses. ECF No. 45 at 4-5 [¶¶10-12]; Case

No. 21-1203, ECF No. 56 at 5 [¶9]. He argues that the amount he paid in taxes on the lump sum

was greater than what he would have paid if he had received the income gradually over the years

he should have been paid. ECF No. 45 at 4-5 [¶¶10-12]. He argues that DFAS owes him a tax

gross-up amounting to that difference. Id. The government argues that there is no precedent in this

court or the Federal Circuit for granting tax gross-ups to individuals—only to corporations—and

the court lacks jurisdiction to grant that relief. ECF No. 56 at 4-5; ECF No. 81 at 5-7.

Surprisingly, neither party cites, nor could the court find, any cases in this court or in the

Federal Circuit that (1) involved the federal government under the Military Pay Act or any other

employment-related statute and (2) addressed tax gross-ups for back pay. There have been cases

under the Tucker Act in this court and the Federal Circuit that addressed tax gross-ups for damages

awards, but those do not address the Military Pay Act in particular or back pay to individuals, and

those do not discuss the implications of Congress’s waiver of sovereign immunity. There are cases

in other circuits in which plaintiffs sued private employers for back pay under other employment-

related statutes, but those do not implicate sovereign immunity or the particular text of the Tucker

Act or Military Pay Act. There are cases in other circuits involving tax gross-ups for plaintiffs who

sued the federal government that involve back pay and address sovereign immunity, but they do

not arise under the Tucker Act. And none of the cases address the related issues of state taxes or

other penalties. This case thus raises essentially novel issues. The binding cases come from the

Federal Circuit, and the court will address those first, followed by the cases from other circuits, in

approximate order of relevance and persuasiveness.

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The Federal Circuit and this court have considered and granted tax gross-ups to corpora-

tions in breach-of-contract cases to ensure that damages effectively compensated the corporations

for harm done by the federal government. See Home Savings of America, 399 F.3d at 1356 (af-

firming the Court of Federal Claims’ adjustment of damages to reflect a tax gross-up); Sonoma

Apartment Associates v. United States, 939 F.3d 1293, 1298-1301 (Fed. Cir. 2019) (vacating and

remanding where the Court of Federal Claims had ordered a tax gross-up as speculative but con-

firming the concept of providing a tax gross-up to compensate for increased tax burden in a breach-

of-contract case against the government); Anchor Savings Bank, FSB v. United States, 121 Fed.

Cl. 296, 332 (2015) (determining that a plaintiff corporation’s damages are subject to a tax gross-

up). In Home Savings of America, this court granted the plaintiffs a tax gross-up because the harm

from a government breach of contract resulted in the loss of non-taxable money, but the damages

awarded would be subject to income tax. 399 F.3d at 1356. The Federal Circuit found no prece-

dential authority related to tax gross-ups and instead “adopt[ed] the rule of other courts that a tax

gross-up is appropriate when a taxable award compensates a plaintiff for lost monies that would

not have been taxable.” Id.

Although the Federal Circuit has not discussed the breadth of Congress’s waiver of sover-

eign immunity that allowed it to reach its conclusion, both Home Savings of America and Sonoma

involved breach-of-contract claims arising directly under the Tucker Act, which waives sovereign

immunity for those breach-of-contract claims. 399 F.3d at 1344; 939 F.3d at 1295; see 28 U.S.C.

§ 1491(a)(1). The Tucker Act permits awarding “liquidated or unliquidated damages” and aims

“[t]o provide an entire remedy and to complete the relief afforded by the judgment” for the harms

caused by the federal government’s actions. 28 U.S.C. § 1491(a). This court’s jurisdiction to pro-

vide a remedy under the Military Pay Act also arises under the Tucker Act, and the Military Pay

9

Act provides no other statement of or limit on the damages available. 37 U.S.C. § 204; see gener-

ally Holley, 124 F.3d at 1465-66. Because the Federal Circuit held that, in the context of the Tucker

Act, a tax gross-up is available, that is arguably binding in this specific Tucker Act context. And

there is no apparent reason, nor does the government propose one, for providing a tax gross-up for

corporations but not individuals, or for finding a waiver of sovereign immunity in the Tucker Act

for corporations but not individuals.

The Third Circuit addressed the issue of individual entitlement to a tax gross-up on back

pay in Eshelman 554 F.3d at 440-43. Although it arises in the context of a suit against a private

employer, not the federal government, Eshelman is instructive on tax gross-ups for individuals in

the employment context. And, in fact, the Federal Circuit cited Eshelman approvingly in Sonoma,

939 F.3d at 1298, when discussing tax gross-ups in the context of suits against the federal govern-

ment, making Eshelman all the more instructive here.

In Eshelman, a jury found that Agere Systems discriminated against Ms. Eshelman in vio-

lation of the Americans with Disabilities Act (ADA) and the Pennsylvania Human Relations Act

and awarded her back pay and compensatory damages. Eshelman, 554 F.3d at 432. After the trial

concluded, Ms. Eshelman moved for an additional monetary award to offset the extra taxes she

had to pay from receiving a lump-sum payment. The district court granted that motion and awarded

her the tax gross-up on her back pay. Id. Agere Systems, like the government here, argued that

there was no statutory authority or case law that supported granting Ms. Eshelman a tax gross-up.

Id. at 440. In addressing the issue, the Third Circuit noted that “a chief remedial purpose of em-

ployment discrimination statutes such as the ADA is ‘to make persons whole for injuries suffered

on account of unlawful employment discrimination.’” Id. (quoting Albemarle Paper Co. v. Moody,

422 U.S. 405, 418 (1975)). The court stated that “Congress armed the courts with broad equitable

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power to effectuate this ‘make whole remedy,’” and that “[d]istrict courts are granted wide discre-

tion to ‘locate a just result’ regarding the parameters of the relief granted in the circumstances of

each case.” Id. (cleaned up). The court explained that “district courts should … endeavor to restore

the employee to the economic status quo that would exist but for the employer’s conduct.” Id. at

440-41 (cleaned up). The Third Circuit therefore held that “a district court may, pursuant to its

broad equitable powers granted by the ADA, award a prevailing employee an additional sum of

money to compensate for the increased tax burden a back pay award may create.” Id. at 441-42.

Here, Mr. Attia’s suit arises under the Military Pay Act and the Tucker Act, not the ADA.

The Tucker Act, as discussed, has very little text discussing the remedies available to litigants, and

the Military Pay Act has none. 28 U.S.C. § 1491(a) (permitting an award of “liquidated or unliqui-

dated damages” and aiming “[t]o provide an entire remedy and to complete the relief afforded by

the judgment”); see 36 U.S.C. § 204. The ADA, on the other hand, has an extended discussion of

the remedies available. For intentional acts, a court may issue an injunction, order “reinstatement

or hiring of employees, with or without back pay (payable by the employer, employment agency,

or labor organization, as the case may be, responsible for the unlawful employment practice), or

any other equitable relief as the court deems appropriate. Back pay liability shall not accrue from

a date more than two years prior to the filing of a charge with the Commission. Interim earnings

or amounts earnable with reasonable diligence by the person or persons discriminated against shall

operate to reduce the back pay otherwise allowable.” 42 U.S.C. § 2000e-5(g)(1).

That text, which includes injunctive remedies, back pay, and “any other equitable relief as

the court deems appropriate,” underlay the Supreme Court’s “make whole remedy” and the Third

Circuit’s interpretation of that remedy to include tax gross-ups in Eshelman. The Tucker Act does

not elaborate, but it incorporates “broad equitable powers.” Turner Construction Co. v. United

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States, 645 F.3d 1377, 1388 (Fed. Cir. 2011) (“[O]nce jurisdiction attaches, the Court of Federal

Claims has broad equitable powers to fashion an appropriate remedy.”). This court has wide dis-

cretion under the Tucker Act to remand certain matters to an agency with any directions the court

“may deem proper and just.” 28 U.S.C. § 1491(a)(2).

DFAS based its pay decision on 32 C.F.R. § 581.3(h)(2)(ii). See ECF No. 37-1 at 1. Under

that regulation, “DFAS will settle claims on the basis of the corrected military record. The DFAS

will compute the amount due, if any.” 32 C.F.R. § 581.3(h)(2)(ii). The statutory authority for that

regulation arises from 10 U.S.C. § 1552. The Secretary of the Army “may pay” claimants who

make “a claim for the loss of pay, allowances, compensation, emoluments, or other pecuniary

benefits … if, as a result of correcting a record under this section, the amount is found to be due

the claimant on account of his … service in the Army.” 10 U.S.C. § 1552(c)(1). Although

§ 1552(c)(1) uses the word “may,” it does not give the Secretary discretion not to provide relief.

See McCord v. United States, 943 F.3d 1354, 1359 (Fed. Cir. 2019) (explaining that, while

§ 1552(c)(1) itself is not money-mandating, “it becomes money-mandating if a claimant was im-

properly denied benefits but became entitled to them under other provisions of law”); Caddington

v. United States, 178 F. Supp. 604, 631-32 (Ct. Cl. 1959) (With respect to the authority provided

in § 1552, “[t]he act is remedial in nature. We believe that this imposes on the Secretary the twofold

duty to properly evaluate the nature of any error or injustice and, in addition, to take such corrective

action as will appropriately and fully erase such error or compensate such injustice.”); see also

Hale v. United States, 107 Fed. Cl. 339, 344-46 (2012) (In the context of a prior military service

enlistment bonus, the statute’s use of the word “may” for the Secretary’s authority to pay a bonus

did not make the statute discretionary because, under Supreme Court precedent, “eligible service

members who met the statutory requirements for payment of the bonus were entitled to receive it,”

12

and the statute sets out explicit standards for eligibility and precise amounts to be paid.). Thus, the

Secretary should provide back pay that makes the claimant whole. In sum, DFAS is required, by

regulation and statute, to make servicemembers like Mr. Attia whole, and this court has the au-

thority to order appropriate relief to effectuate that.

The Seventh, Ninth, and Tenth Circuits—in the context of Title VII of the Civil Rights Act,

which incorporates the same remedies provision at issue in Eshelman under the ADA—have

agreed with the Third Circuit on providing a tax gross-up on back pay in the employment discrim-

ination context. Sears v. Atchison, Topeka & Santa Fe Railway, Co., 749 F.2d 1451, 1456 (10th

Cir. 1984); E.E.O.C. v. Northern Star Hospitality, Inc., 777 F.3d 898, 904 (7th Cir. 2015); Clemens

v. Centurylink Inc., 874 F.3d 1113, 1116-17 (9th Cir. 2017).

The Eighth Circuit, also under Title VII and the same remedies provision as the ADA,

rejected a tax gross-up on back pay against the government. The court explained that “[n]owhere

within the statutory framework … has Congress expressly waived sovereign immunity from tax

enhancement damages.” Arneson v. Callahan, 128 F.3d 1243, 1247 (8th Cir. 1997). The Eighth

Circuit added that “Congress must expressly and unequivocally waive sovereign immunity before

a party can recover a tax enhancement award from the federal government.” Id.

The D.C. Circuit reviewed a different remedy provision, from the Age Discrimination in

Employment Act, which provides that “[a]ny person aggrieved may bring a civil action in any

Federal district court of competent jurisdiction for such legal or equitable relief as will effectuate

the purposes of this chapter.” 29 U.S.C. § 633a(c). Under that remedy provision, the court rejected

a tax gross-up on back pay against the federal government because of the “lack of support in ex-

isting case law for tax gross-ups” in the circuit. Dashnaw v. Pena, 12 F.3d 1112, 1116 (D.C. Cir.

1994); see Fogg v. Gonzales, 492 F.3d 447, 456 (D.C. Cir. 2007).

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Although the Eighth and D.C. Circuits each considered a tax gross-up for back pay in the

context of litigation against the federal government, with the accompanying requirement of a

waiver of sovereign immunity, this court nevertheless finds the Federal Circuit’s decisionmaking

more persuasive as applied to this case. That is particularly true because the Federal Circuit’s de-

cisions are binding on this court, and the Federal Circuit decided Home Savings of America and

Sonoma under the Tucker Act’s waiver of sovereign immunity. The court’s conclusion is strength-

ened by the Federal Circuit’s approval of Eshelman, a case involving employee back pay.

Furthermore, the Eighth and D.C. Circuits’ reasoning is not persuasive here. The D.C. Cir-

cuit provided no reasoning, although its opinion elsewhere alluded to sovereign immunity. Dash-

naw, 12 F.3d at 1113 n.1. The Eighth Circuit did explain that it was relying on the fact that Con-

gress had not expressly and unequivocally waived sovereign immunity in the context of the rele-

vant Title VII statutory scheme. Callahan, 128 F.3d at 1247. Here, the Tucker Act gives this court

“jurisdiction to render judgment upon any claim against the United States” including those founded

upon “the Constitution, or any Act of Congress or any regulation of an executive department, or

upon any express or implied contract.” 28 U.S.C. § 1491(a)(1)-(2). “In authorizing [the Court of

Federal Claims] to enter judgment against the United States, Congress waived sovereign immunity

for those claims that the statute enables the court to entertain.” New York Life Insurance Co. v.

United States, 118 F.3d 1553, 1557 (Fed. Cir. 1997) (quotation marks omitted). This court and the

Federal Circuit have awarded tax gross-ups to parties in other cases over which this court has

Tucker Act jurisdiction. See Home Savings of America, 399 F.3d at 1356; see also Sonoma, 939

F.3d at 1298; Anchor Savings Bank, 121 Fed. Cl. at 330-31. Tax gross-ups are appropriate in cases

over which the court already has Tucker Act jurisdiction, and the court does not require a separate

explicit waiver of sovereign immunity.

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Under the Tucker Act, if the court finds the “amount … to be due” a plaintiff should include

a federal tax gross-up on his back pay, to cover the extra taxes federal he had to pay because of

the government’s error, the court may remand the case to DFAS with directions to pay him ac-

cordingly. 28 U.S.C. § 1491(a)(2); see 10 U.S.C. § 1552(c)(1); 32 C.F.R. § 581.3(h)(2)(ii). In this

case, DFAS owes Mr. Attia a tax gross-up because he was effectively paid less by having to pay

more federal tax than he otherwise would have paid. That gross-up should equal the difference

between the federal taxes he paid in the years he received his lump sums and the federal taxes he

would have paid had he received the payments over the course of the years the payments were

owed.

Mr. Attia’s tax gross-up claims are split between his two complaints. He requests a tax

gross-up on his income back pay in count two of his amended complaint in Case No. 20-1801.

ECF No. 45 at 4-5 [¶¶10-12]. For that count, the government filed a motion both to dismiss and

for judgment on the administrative record. ECF No. 56 at 4-6. Mr. Attia filed a cross-motion for

judgment on the administrative record. ECF No. 72 at 4-5. Mr. Attia requests a tax gross-up on his

language proficiency back pay in count three of his amended complaint in Case No. 21-1203. Case

No. 21-1203, ECF No. 56 at 5 [¶9]. The government filed a motion to dismiss that claim. ECF No.

81 at 5-7.

The court agrees with Mr. Attia that he is entitled to judgment on the administrative record

on count two of the complaint in Case No. 20-1801. Because one legal issue in count three of the

complaint in Case No. 21-1203 is identical to the legal issue in count two of Case No. 20-1801,

the court finds that Mr. Attia is entitled to judgment on that issue as well. The court will remand

both federal tax gross-up claims to DFAS to calculate Mr. Attia’s entitlement to a federal tax gross-

up.

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B. Mr. Attia is not entitled to a state tax gross-up, must pay taxes in the year he

is paid, and is responsible for paying penalties for any errors on his tax returns

Mr. Attia alleges that, in addition to a federal tax gross-up, DFAS owes him a state tax

gross-up on his income and language proficiency back pay. ECF No. 45 at 6-7 [¶¶13-15]; Case

No. 21-1203, ECF No. 56 at 5 [¶9]. Mr. Attia also asserts that DFAS should have allocated federal

and state tax withholdings related to his language proficiency back pay across 2022 and 2023 and

issued corrected W-2 forms to reflect that. Case No. 21-1203, ECF No. 56 at 3-5 [¶¶5-8]. He adds

that DFAS’s payment errors caused him to make errors on his tax returns, leading to tax penalties

and fees. Id.; ECF No. 83 at 2-3. The government argues there is no legal basis for requiring DFAS

to pay a state tax gross-up or to allocate withholdings across multiple tax years. ECF No. 56 at 6-

7; ECF No. 81 at 4.

Damages must be foreseeable to be recoverable; “[d]amages do not extend to remote con-

sequences” of an injury. Kansas Gas and Electric Co. v. United States, 685 F.3d 1361, 1366 (Fed.

Cir. 2012); see Wells Fargo Bank, N.A. v. United States, 88 F.3d 1012, 1021 (Fed. Cir. 1996)

(“remote and consequential damages are not recoverable in a common-law suit … especially in

suits against the United States for the recovery of common-law damages” (cleaned up)); see also

Yankee Atomic Electric Co. v. United States, 536 F.3d 1268, 1273 (Fed. Cir. 2008) (stating that

plaintiffs could only sustain their damages claim if the damages were reasonably foreseeable by

the breaching party).

The Internal Revenue Service operates under the purview of the federal government; the

federal government can be responsible for federal-tax-related damages because it could have fore-

seen the federal tax harm that could result from payment issues and lump-sum back pay. But state-

tax penalties and damages are more remote and unforeseeable: State taxes differ depending on the

state, are filed in state-specific systems, and are generally disconnected from the federal

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government’s infrastructure. In this case, Mr. Attia paid extra taxes to the federal government due

to the lump-sum back pay; to pay him damages, the federal government is effectively giving him

back some of the money it received from him. The federal government knows his federal tax bur-

den and can compensate for it. Not so for his state taxes. See generally Sonoma, 939 F.3d at 1299-

1301 (explaining that the government was not responsible for future federal taxes on a lump-sum

award where the future federal taxes were speculative and unpredictable).

Similarly, any fees or penalties Mr. Attia incurred as a result of his mistakes on his tax

returns, regardless of the reason, are too remote and unforeseeable to be recoverable as damages.

See Kansas Gas, 685 F.3d at 1366; Wells Fargo, 88 F.3d at 1021; Yankee Atomic, 536 F.3d at

1273. Mr. Attia is responsible for paying his taxes in the year he was paid, under IRS rules, and

the government is not responsible for breaking with the IRS’s practice and allocating withholdings

across different years. IRS Publication 957, Reporting Back Pay and Special Wage Payments to

the Social Security Administration, 2 (2024), available at https://www.irs.gov/pub/irs-prior/p957-

-2024.pdf.

This court therefore agrees with the government with respect to count three of Mr. Attia’s

amended complaint in Case No. 20-1801 (ECF No. 45 at 6-7 [¶¶13-15]) and count two and the

state tax gross-up portion of count three of Mr. Attia’s amended complaint in Case No. 21-1203

(Case No. 21-1203, ECF No. 56 at 3-5 [¶¶5-9]). Those aspects of Mr. Attia’s complaints must be

dismissed.

C. Mr. Attia’s remaining allegations fail to state a claim for relief

In his complaint, Mr. Attia asserts that DFAS must issue him a corrected 2009 W-2 form,

(ECF No. 45 at 3-4 [¶¶7-9]) and attribute the appropriate Social Security allocations to his cor-

rected earnings (ECF No. 45 at 7-8 [¶¶16-18]). The government argues that both of those issues

are moot. The government argues (1) that DFAS has already issued Mr. Attia a corrected W-2

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form for 2009; and (2) that DFAS has already submitted the relevant forms to the Social Security

Administration to reallocate Mr. Attia’s earnings appropriately. ECF No. 56 at 3-4, 6-7. The gov-

ernment adds that Mr. Attia has since agreed to dismiss both claims. Id.; see ECF No. 56 at Ex. A,

Ex. B. In response, Mr. Attia notes that he does not oppose the government’s mootness arguments

for those claims. ECF. No 72 at 2-3. The court thus agrees with the government and will dismiss

as moot counts one and four of Mr. Attia’s amended complaint in Case No. 20-1801 (ECF No. 45

at 3-4 [¶¶7-9], 7-8 [¶¶16-18]).

Mr. Attia also alleges in one amended complaint that he never received the full language

proficiency payment to which he is entitled. Case No. 21-1203, ECF No. 56 at 2-3 [¶¶3-4]. The

government states that, since Mr. Attia filed his amended complaint, DFAS has paid him all the

additional language proficiency pay he was owed. ECF No. 81 at 3. Mr. Attia does not respond to

this point, forfeiting any argument about it. ECF No. 83 at 2 (arguing instead that the payments he

received were not based on any deception or fraud); see In re Google Technology Holdings LLC,

980 F.3d 858, 862-64 (Fed. Cir. 2020). Because Mr. Attia does not dispute that DFAS paid Mr.

Attia, that claim is moot. See ECF No. 81 at Ex. A (affidavit of a DFAS financial management

specialist). The court thus agrees with the government and will dismiss count one of Mr. Attia’s

amended complaint in Case No. 21-1203 (Case No. 21-1203, ECF No. 56 at 2-3 [¶¶3-4]).

Mr. Attia alleges that DFAS must pay missing tax withholdings for 2014 to the IRS or

correct its 2014 record to the IRS. ECF No. 45 at 8 [¶19]); ECF No. 72 at 3. He alleges that DFAS’s

erroneous records have resulted in his having to pay penalties and that he has an ongoing case in

tax court to address the issue. Id. The government argues that Mr. Attia failed to identify a money-

mandating statute that would allow for the relief Mr. Attia seeks. ECF No. 56 at 8-9. Mr. Attia

responds that he does not oppose dismissal of his claim without prejudice because he may soon

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get relief in his related pending tax case. ECF No. 72 at 3-4. It is unclear whether Mr. Attia’s IRS-

related issues may lead to a separate tax claim within this court’s jurisdiction. Given the uncer-

tainty over this claim, the court agrees with Mr. Attia and will dismiss without prejudice count five

of Mr. Attia’s amended complaint in Case No. 20-1801 (ECF No. 45 at 8 [¶19]).

III. Conclusion

For the reasons stated above, this court

1. Grants Mr. Attia’s motion for judgment on the administrative record and denies the gov-

ernment’s motion to dismiss and motion for judgment on the administrative record as to

count two of Mr. Attia’s amended complaint in Case No. 20-1801 (ECF No. 45 at 4-5

[¶¶10-12]); denies the government’s motion to dismiss as to the federal tax gross-up por-

tion of count three of Mr. Attia’s amended complaint in Case No. 21-1203 (Case No. 21-

1203, ECF No. 56 at 5 [¶9]); remands the federal tax gross-up issue to DFAS until June

27, 2025, on or before which DFAS shall calculate how much Mr. Attia is owed in a federal

tax gross-up on his income and language proficiency back pay;

2. Grants the government’s motion to dismiss and motion for judgment on the administrative

record as to count three of Mr. Attia’s amended complaint in Case No. 20-1801 (ECF No.

45 at 6-7 [¶¶13-15]); grants the government’s motion to dismiss as to count two and the

state tax gross-up portion of count three of Mr. Attia’s amended complaint in Case No. 21-

1203 (Case No. 21-1203, ECF No. 56 at 3-5 [¶¶5-9]); dismisses those counts on the state

tax gross-up and Mr. Attia’s errors on his tax returns;

3. Grants the government’s motion to dismiss and motion for judgment on the administrative

record as to counts one and four of Mr. Attia’s amended complaint in Case No. 20-1801

(ECF No. 45 at 3-4 [¶¶7-9], 7-8 [¶¶16-18]) on correcting forms; dismisses those counts as

moot;

4. Grants the government’s motion to dismiss as to count one of Mr. Attia’s amended com-

plaint in Case No. 21-1203 (Case No. 21-1203, ECF No. 56 at 2-3 [¶¶3-4]) on the full

language proficiency payment; dismisses that count as moot;

5. Grants in part the government’s motion to dismiss and motion for judgment on the ad-

ministrative record as to count five of Mr. Attia’s amended complaint in Case No. 20-1801

(ECF No. 45 at 8 [¶19]) on penalties caused by DFAS’s erroneous records; and dismisses

that count without prejudice.

The government shall file a status report by May 12, 2025, informing the court of the status

of DFAS’s calculations and any payment to Mr. Attia. The case is stayed until June 27, 2025. The

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parties shall file a joint status report by July 11, 2025, informing the court of the status of DFAS’s

calculations and any payment to Mr. Attia and proposing any next steps in this case.

IT IS SO ORDERED.

s/ Molly R. Silfen

MOLLY R. SILFEN

Judge

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