INTERSPORT FASHIONS WEST, INC. v. USA

Filing 21

ORDER granting 15 Motion to Dismiss In Part - Rule 12(b)(1) Signed by Judge Emily C. Hewitt. (ae)

I N T E R S P O R T FASHIONS WEST, INC. v. USA

D o c . 21

In the United States Court of Federal Claims
N o . 07-739 T (E -F ile d : October 29, 2008) ) ) ) ) ) ) ) ) ) ) )

IN T E R S P O R T FASHIONS WEST, INC., P la in tif f , v. T H E UNITED STATES, Defendant.

M o tio n to Dismiss for Lack of Subject Matter Jurisdiction; V a lid ity of Tax Assessment; Full Payment Rule; 26 U.S.C. § 6 2 0 3 ; 26 C.F.R. § 301.6203-1; RCFC 12(b)(1)

D o n a ld Rightnour, McLean, VA, for plaintiff. Ja c o b E. Christensen, with whom were Nathan J. Hochman, Assistant Attorney General, D a v id Gustafson, Chief, and Steven I. Frahm, Assistant Chief, Court of Federal Claims S e c tio n , Tax Division, United States Department of Justice, Washington, DC, for d e f e n d a n t. O P IN I O N AND ORDER H E W IT T , Judge B ef o re the court are defendant's Motion of the United States to Dismiss in Part (d e f en d a n t's Motion or Def.'s Mot.), plaintiff's Response to Motion of the United States to Dismiss in Part (plaintiff's Response or Pl.'s Resp.), plaintiff's Memorandum of the P la in tif f in Support of its Motion to Deny United States Motion (plaintiff's Memorandum o r Pl.'s Mem.), and defendant's Reply of the United States in Support of its Motion to D ism iss in Part (defendant's Reply or Def.'s Reply). F o r the following reasons, defendant's Motion is GRANTED.

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I.

B a c k g ro u n d A. P ro c ed u ral History

P la in tif f filed a complaint with this court on October 22, 2007, requesting "a ju d g m e n t against the United States in the amount of $977,346, plus applicable interest, p lus other and further relief as the [c]ourt deems just and proper." Complaint (plaintiff's C o m p la in t or Compl.), filed Oct. 22, 2007 at 2. The amount of $977,346 is comprised of p la in tif f 's requested refund of corporate income tax in the amounts of $393,992 "for f is c a l year September 30, 2001" (2001 Tax Period), Compl. 1, and $583,354 "for fiscal ye a r September 30, 2002," id. In defendant's Motion, defendant moves to dismiss p la in tif f 's Complaint pursuant to Rule 12(b)(1) of the Rules of the Court of Federal C la im s (RCFC) only "with respect to plaintiff's refund claim for the [2001 Tax Period]." Def.'s Mot. 1. B. T h e Parties' Positions

D ef en d an t argues that the court lacks subject matter jurisdiction over plaintiff's c o m p l a in t with respect to plaintiff's refund claims for the 2001 Tax Period because p la in tif f "failed to pay the full amount of tax assessed with respect to the [2001 Tax P e rio d ]." Def.'s Mot. 3. Plaintiff "does not dispute that full tax assessed must be paid to f ile a refund suit in the [United States] Court of Federal Claims." Pl.'s Mem. 2. Instead, p la in tif f argues that defendant's Motion should be denied because (1) "the United States h a s not established that a valid assessment of tax is outstanding for the [2001 Tax P e rio d ]," and (2) "the Internal Revenue Service [(IRS)] has ignored all requests made by . . . [p]laintiff beginning in January 2006 to prove validity of the purported tax liability." Pl.'s Resp. 1. II. S ta n d a rd of Review

R C F C 12(b)(1) governs the dismissal of claims for lack of subject matter ju ris d ic tio n . RCFC 12(b)(1). In deciding a motion to dismiss pursuant to RCFC 1 2 (b )(1 ), "the court [is] obligated to assume all factual allegations to be true and to draw a ll reasonable inferences in plaintiff's favor." Henke v. United States, 60 F.3d 795, 797 (F e d . Cir. 1995). However, the burden of proof of establishing jurisdiction is borne by the plaintiff. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); R u s s e ll v. United States, 78 Fed. Cl. 281, 285 (2007). If the defendant challenges ju ris d ic tio n a l facts, the plaintiff must support them with "competent proof." Id. The p lain tiff bears the burden to show by a preponderance of the evidence that jurisdiction is p ro p e r. Reynolds v. Army & Air Force Exch. Serv. (Reynolds), 846 F.2d 746, 748 (Fed. 2

C ir. 1988). Jurisdiction is a threshold matter and a case can proceed no further if the co u rt lacks jurisdiction to hear it. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1 9 9 8 ). If the motion to dismiss for lack of subject matter jurisdiction disputes the truth o f the jurisdictional facts alleged in the complaint, a court may consider other relevant e v id e n c e to resolve the factual dispute. Moyer v. United States (Moyer), 190 F.3d 1314, 1 3 1 8 (Fed. Cir. 1999) (citing Reynolds, 846 F.2d at 747). III. D is c u ss io n A. J u ris d ic tio n of the Court of Federal Claims

T h e United States Court of Federal Claims (Court of Federal Claims), like all f e d e ra l courts, is a court of limited jurisdiction. See United States v. King, 395 U.S. 1, 3 (1 9 6 9 ). The Tucker Act is the primary statute establishing the jurisdiction of the court. 28 U.S.C. § 1491(a)(1) (2006). In relevant part, the statute provides that this court "shall h a v e jurisdiction to render judgment upon any claim against the United States founded e ith e r upon the Constitution, or any Act of Congress or any regulation of an executive d e p a rtm e n t, or upon any express or implied contract with the United States." Id. However, plaintiff must establish more than the mere existence of a statute or c o n stitu tio n a l provision to bring himself within the jurisdiction of this court. The Tucker A c t provides the waiver of sovereign immunity necessary to sue the United States for m o n e y damages, but the plaintiff must establish an independent substantive right to m o n e y damages from the United States, that is, a money-mandating source within a c o n tra c t, regulation, statute, or constitutional provision itself, in order for the case to p ro c e ed . See United States v. Testan, 424 U.S. 392, 398 (1976). As stated by the United S ta te s Court of Appeals for the Federal Circuit (Federal Circuit), the alleged source of the su b sta n tiv e right to money damages must "be reasonably amenable to the reading that it m a n d a tes a right of recovery in damages. While the premise to a Tucker Act claim will n o t be `lightly inferred,' . . . a fair inference will do." Fisher v. United States (Fisher), 4 0 2 F.3d 1167, 1174 (Fed. Cir. 2005) (en banc) (quoting United States v. White Mountain A p a c h e Tribe, 537 U.S. 465, 472-73 (2003)) (emphases and omission in original). The Federal Circuit recently clarified that in Fisher it considered three grounds on w h ic h the government "might file a motion to dismiss in a Tucker Act case: (1) lack of su b jec t matter jurisdiction due to the lack of a money-mandating source; (2) failure to s ta te a claim upon which relief can be granted due to lack of a money-mandating source; a n d (3) failure to state a claim upon which relief can be granted because the plaintiff is u ltim a te ly not entitled to recover money damages under the statute." Greenlee County v. U n ite d States, 487 F.3d 871, 876 (Fed. Cir. 2007) (citing Fisher, 402 F.3d at 1172-73). 3

T h e Federal Circuit reiterated that this court is to resolve motions to dismiss under g ro u n d s one and two "by a `single step' at the outset of the case and `the determination th a t the source is money-mandating shall be determinative both as to the question of the c o u rt's jurisdiction and thereafter as to the question of whether, on the merits, plaintiff h as a money-mandating source on which to base his cause of action." Id. (quoting Fisher, 4 0 2 F.3d at 1172-73). Therefore, if the contract, regulation, statute, or constitutional p ro v is io n relied on by plaintiff as the basis of a claim is not reasonably amenable to being in te rp re te d to constitute a money-mandating source, this court must dismiss the claim due to the lack of subject matter jurisdiction. Congress has "provided the necessary consent," Shore v. United States (Shore), 9 F .3 d 1524, 1525 (Fed. Cir. 1993), to waive sovereign immunity both generally in the T u c k e r Act, and specifically with respect to tax refund suits, in 28 U.S.C. § 1346(a)(1). 28 U.S.C. § 1346(a)(1) (2006); 28 U.S.C. § 1491(a)(1); Shore, 9 F.3d at 1525. Section 1 3 4 6 (a )(1 ) of title 28 of the U.S. Code establishes this court's jurisdiction over suits for th e refund of taxes concurrent with the United States district courts. 28 U.S.C. § 1 3 4 6 ( a )( 1 ); Daniels v. United States (Daniels), 77 Fed. Cl. 251, 254 (2007); see also U sib e lli Coal Mine v. United States, 54 Fed. Cl. 373, 375 n.6 (2002) (discussing this c o u rt's jurisdiction over tax refund suits derived from both the Tucker Act and 28 U.S.C. § 1346(a)(1)). However, the Supreme Court has limited the jurisdiction of this court (and th e district courts) in tax refund suits to those claims in which the taxpayer has paid fully a ll tax assessed for the tax year at issue prior to the initiation of the claim (full payment ru le ). Flora v. United States (Flora), 362 U.S. 145, 155 (1960), aff'g 357 U.S. 63 (1958). The Federal Circuit has held that the full payment rule is applicable to tax refund claims b ro u g h t pursuant to the Tucker Act as well as claims initiated under 28 U.S.C. § 1 3 4 6 (a )(1 ). Shore, 9 F.3d at 1526 (citing Tonasket v. United States, 218 Ct. Cl. 709, 7111 2 , 590 F.2d 343 (table) (1978) and Katz v. United States, 22 Cl. Ct. 714, 714-15 (1991)). The full payment rule established by the Supreme Court in Flora therefore means that if "the principal tax deficiency has not been paid in full, such tax refund claims are d is m is s e d . . . ." Shore, 9 F.3d at 1526. B. T h e Court Lacks Jurisdiction Over Plaintiff's Claim for the 2001 Tax P e rio d

T h e court lacks jurisdiction over plaintiff's tax refund suit with respect to the 2001 T a x Period for two reasons. First, the assessment is presumptively correct and plaintiff h a s not rebutted the assessment's presumptive validity. Second, plaintiff's failure to pay th e full amount of its tax liability prior to initiating this action precludes jurisdiction over its refund suit.

4

1.

P r o c e d u ra l Validity and Timeliness of the Assessment

P la in tif f argues that the "inconsistency in the transcripts [provided to plaintiff by th e IRS]," Pl.'s Mem. 2, coupled with the fact that the IRS "never provided an e x p la n a tio n as to why their records were inconsistent," id. at 1, together prove that d e f en d a n t "has not established that a valid assessment of tax is outstanding for the [2001 T a x Period]," Pl.'s Resp. 1. However, based on the evidence presented, valid a ss e ss m e n ts were made against plaintiff on December 29, 2005 and plaintiff has offered n o evidence to rebut the presumptive validity of the assessments. a. V a lid Assessments Were Timely Made Against Plaintiff on December 29, 2005

A tax "`[a]ssessment' refers to a prescribed procedure for officially recording the a m o u n t of a taxpayer's administratively determined tax liability." Dallin ex rel. Estate of Y o u n g v. United States (Young), 62 Fed. Cl. 589, 592 (2004). Tax assessment p ro c e d u re s are governed by 26 U.S.C. § 6203 and its implementing Treasury Regulation 2 6 C.F.R. § 301.6203-1. See Gentry v. United States (Gentry), 962 F.2d 555, 557-58 (6th C ir. 1992) (analyzing propriety of tax assessment under procedures set forth in 26 U.S.C. § 6203 and Treasury Regulations); Young, 62 Fed. Cl. at 599 (same); Teets v. United S tates (Teets), 29 Fed. Cl. 697, 703 (1993) ("The proper method for assessing taxpayers is treated in 26 U.S.C. § 6203 and its corresponding Treasury Regulation, § 301.6203-1 . . . ."). Under 26 U.S.C. § 6203, "[t]he assessment shall be made by recording the liability o f the taxpayer in the office of the Secretary [of the Treasury] in accordance with rules or re g u la tio n s prescribed by the Secretary." 26 U.S.C. § 6203 (2006). The pertinent part of th e regulation provides the manner in which the assessment shall be made: The assessment shall be made by an assessment officer signing the s u m m a ry record of assessment. The summary record, through supporting re c o rd s , shall provide identification of the taxpayer, the character of the lia b ility assessed, the taxable period, if applicable, and the amount of the asse ssm en t. . . . The date of the assessment is the date the summary record is signed by an assessment officer. If the taxpayer requests a copy of the re c o rd of assessment, he shall be furnished a copy of the pertinent parts of th e assessment which set forth the name of the taxpayer, the date of a ss e ss m e n t, the character of the liability assessed, the taxable period, if a p p lic a b le , and the amounts assessed. 2 6 C.F.R. § 301.6203-1. "[T]he IRS must comply with the regulations governing the a ss e ss m e n t process. The purpose of the regulations is to ensure both the efficiency and 5

th e accuracy of the assessment process." March v. IRS, (March), 335 F.3d 1186, 1188 (1 0 th Cir. 2003). Plaintiff asserts that the inconsistency in the transcripts provided to plaintiff by the IR S pursuant to 26 C.F.R. § 301.6203-1, casts doubt on the timeliness of the assessment f o r the 2001 Tax Period, and therefore casts doubt also on the application of the full p a ym e n t rule with respect to the 2001 Tax Period. See Pl.'s Mem. 2-3. Defendant m a in ta in s that the assessment was correctly and timely made pursuant to statute and re g u la tio n , and plaintiff's failure to pay the outstanding tax assessment requires dismissal o f plaintiff's claim for the 2001 Tax Period. Def.'s Mot. 3-5. When the truth of a ju risd ictio n a l fact is disputed, other relevant evidence in addition to the pleadings is e x a m in e d by the court to resolve the factual dispute. Moyer, 190 F.3d at 1318 (citing R e yn o ld s , 846 F.2d at 747). With its motion to dismiss, defendant submitted a Form 4340, Certificate of A s s e ss m e n ts , Payments, and other Specified Matters for Intersport Fashions West, Inc. (C e rtif ic a te ) dated October 30, 2007, showing an outstanding balance against plaintiff for th e 2001 Tax Period in the amount of $118,634.05 inclusive of interest and penalties. Def.'s Mot. Exhibit (Ex.) 1 (Certificate) 4. Defendant also filed the Declaration of Sandy M ik k e ls e n (Mikkelsen Declaration), an employee of the IRS, serving as "the Lead Officer o f the Revenue Accounting Team in the Ogden Service Center located in Ogden, Utah." Def.'s Reply Appendix (App.) B (Mikkelsen Declaration) ¶ 1. Attached to the Mikkelsen D ec laratio n is RACS Report 006, Summary Record of Assessments (Summary Record), sign ed by an assessment officer on December 29, 2005. Def.'s Reply App. B (Summary R e c o rd ) 3. "It is well recognized that a Certificate [of Assessments and Payments] constitutes p ro o f that a tax assessment has been made." Estate of Akin v. United States, 31 Fed. Cl. 8 9 , 96 (1994) (citing Rocovich v. United States (Rocovich), 933 F.2d 991, 994 (Fed. Cir. 1 9 9 1 ) ("A Certificate of Assessments and Payments is routinely used to prove that a tax a s s e ss m e n t has in fact been made.")). A Certificate of Assessments and Payments, also re f erre d to as Form 4340, is "presumptive proof of a valid assessment." United States v. C h ila , 871 F.2d 1015, 1018 (11th Cir. 1989) (citing United States v. Dixon, 672 F. Supp. 5 0 3 , 506 (M.D. Ala. 1987), aff'd per curiam, 849 F.2d 1478 (11th Cir. 1988); see also G e n try, 962 F.2d at 557 ("Certificates of [A]ssessments and [P]ayments are generally re g a rd e d as being sufficient proof, in the absence of evidence to the contrary, of the a d e q u ac y and propriety of notices and assessments that have been made."); Young, 62 F e d . Cl. at 600 ("It is well established that a certified copy of the taxpayer's Form 4340 trig g e rs the presumption of correctness in favor of the government . . . ."). "Therefore, o n c e the [Certificate of Assessments and Payments] is introduced, the taxpayer bears the 6

b u rd e n of showing that the information presented is incorrect." Young, 62 Fed. Cl. at 6 0 1 ; Adams v. United States, 175 Ct. Cl. 288, 301-02, 358 F.2d 986, 994 (Ct. Cl. 1966) (" P ro o f of the assessment establishes a prima facie case and shifts the burden of going f o r w a r d to the taxpayer."). However, "one must read the official documents [such as a C e rtif ic a te of Payments and Assessments] to see what they say. It is insufficient that they m e re ly exist." Jones v. United States (Jones), 60 F.3d 584, 590 (9th Cir. 1995). In order to satisfy the requirements of 26 C.F.R. § 301.6203-1, "[t]he summary re c o rd , through supporting records, shall provide identification of the taxpayer, the c h a ra c te r of the liability assessed, the taxable period, if applicable, and the amount of the a ss e ss m e n t." 26 C.F.R. § 301.6203-1. The Summary Record and Certificate provided by d e f e n d a n t satisfy the requirements of 26 C.F.R. § 301.6203-1. An RACS Report 006 is a " su m m a ry record of assessment" under 26 C.F.R. § 301.6203-1. March, 335 F.3d at 1 1 8 8 . A Certificate of Assessments and Payments, also referred to as a Form 4340, is a "su p p o rting record" under 26 C.F.R. § 301.6203-1. See id. "[P]roduction of a Form 4 3 4 0 creates a presumption that a [s]ummary [r]ecord of [a]ssessment . . . on . . . RACS R e p o rt 006 . . . was validly executed and certified." Id. at 1189. The Certificate provided b y defendant identifies the taxpayer by name as "Intersport Fashions West Inc" and also p ro v id e s plaintiff's Employer Identification Number. Def.'s Mot. Ex. 1 (Certificate) 1. The Certificate contains a column labeled "explanation of transaction" under which the C e rtific a te identifies the character of the liabilities assessed. Id. at 1-3. The taxable p e rio d appears on the Certificate as "Sept 2001." Id. at 1. Finally, the amounts of the a ss e ss m e n ts for the 2001 Tax Period appear under a column labeled "assessment." Id. at 1 -3 . The summary of record assessment, RACS Report 006, together with the supporting re c o rd , Form 4340, satisfy the requirements of 26 C.F.R. § 301.6203-1. In addition, pursuant to 26 C.F.R. § 301.6203-1, "the assessment shall be made by a n assessment officer signing the summary record of assessment. . . . The date of the a s s e s s m e n t is the date the summary record is signed by an assessment officer." 26 C.F.R. § 301.6203-1. The signature requirement "serve[s] multiple purposes." March, 335 F.3d a t 1188. The signature requirement "ensures that an assessment officer reviews the asse ssm en t before it is sent to the taxpayer, and the placing of the officer's signature e sta b lis h e s an effective date of the assessment that is relevant for certain timing re q u ire m e n ts ." Id. The "timing requirement[]," id., for which an "effective date of the a s s e s s m e n t," id., is relevant in this case is the statute of limitations. The statute of limitations for defendant to assess tax against plaintiff for the 2001 T ax Period expired December 31, 2005. Pl.'s Resp. Ex. 1 (Affidavit of John L. Flynn) ¶ 1 ; Def.'s Mot. 4; Def.'s Mot. Ex. 1 (Certificate) 2. The Summary Record contains the a s s e s s m e n ts made against plaintiff, and was signed and dated on December 29, 2005. 7

T h e re f o re , defendant has complied with the requirements of 26 C.F.R. § 301.6203-1, and h as established that the assessments against plaintiff were timely made. The Summary R ec o rd submitted by defendant contained assessments made against plaintiff. Def.'s R e p ly App. B (Mikkelsen Declaration) ¶ 4 (explaining that the first unique Document L o c a to r Number listed on page 3 of the Summary Record refers to assessments made a g a in s t plaintiff on December 29, 2005); see also id. App. B (Summary Record) 3 (listing th e unique Document Locator Numbers that correspond to the requests for assessment p ro c e ss e d on the date of the Summary Record, the first of which corresponds to a s s e s s m e n ts made against plaintiff); id. at 4 (stating that "the RACS Report 006 itself . . . e sta b lis h [ e s] conclusively that plaintiff's assessments are included in the RACS 006 s u m m a ry report for December 29, 2005"); Def.'s Mot. Ex. 1 (Certificate) 2 (listing the u n iq u e Document Locator Number that corresponds to the assessments made against p la in tif f on December 29, 2005). The Summary Record was signed by an assessment o f f ic e r and dated December 29, 2005. Def.'s Reply App. B (Summary Record) 2. Because the Summary Record contains the assessments made against plaintiff, and was sig n e d and dated on December 29, 2005, defendant has complied with the requirements o f 26 C.F.R. § 301.6203-1. The assessments against plaintiff were timely made. Cf. B re w e r v. United States, 764 F. Supp. 309, 315-16 (S.D.N.Y. 1991) (finding that the v a lid ity of liens assessed against plaintiff were "throw[n] into question" when there was " n o indication in the record . . . that the [summary record of assessment] . . . was co m p leted and signed by the assessment officer as required by 26 C.F.R. § 301.6203-1"); Jo n e s v. United States, 60 F.3d 584, 590 (9th Cir. 1995) (finding that presumption in f a v o r of IRS was rebutted as to timeliness of assessment where the summary record of a ss e ss m e n t did not identify any party as having been assessed, and where none of the a m o u n ts claimed against the plaintiff matched the amounts for taxes or penalties on the su m m ary record of assessment). b. P la in tif f 's Evidence Does Not Rebut the Presumptive Validity of the T im e ly Assessments

P la in tif f argues that the "inconsistency in the transcripts [provided to plaintiff by th e IRS]," Pl.'s Mem. 2, coupled with the fact that "the IRS never provided an e x p la n a tio n as to why their records were inconsistent," id. at 1, together prove that d e f en d a n t "has not established that a valid assessment of tax is outstanding for the [2001 T a x Period]," Pl.'s Resp. 1. Plaintiff's arguments do not rebut the presumption in favor o f the IRS as to the validity or timeliness of the assessment for three reasons. First, the d o c u m e n ts provided to plaintiff comported with the requirements of 26 C.F.R. § 3 0 1 .6 2 0 3 -1 . Second, plaintiff cites no authority to support its position. See Pl.'s Resp. p a ss im ; Pl.'s Mem. passim. Third, prior cases with factual circumstances closely a n a lo g o u s to the circumstances in this case do not support plaintiff's argument. 8

First, the documents provided by defendant to plaintiff comported with regulatory re q u ire m e n ts . Pursuant to 26 C.F.R. § 301.6203-1: If the taxpayer requests a copy of the record of assessment, he shall be f u rn is h e d a copy of the pertinent parts of the assessment which set forth the n a m e of the taxpayer, the date of assessment, the character of the liability a s s e s s e d , the taxable period, if applicable, and the amounts assessed. 26 C.F.R. § 301.6203-1. In response to plaintiff's requests, and in accordance with the re g u latio n , defendant provided plaintiff with two transcripts. Pl.'s Mem. 1; Def.'s Reply A p p . B (Mikkelsen Declaration) ¶ 5. The first transcript, dated April 13, 2006, does not re f le c t the assessments made by defendant on December 29, 2005. Pl.'s Mem. 2; see id. E x . 3 (April 2006 Transcript) passim; Def.'s Reply App. B (Mikkelsen Declaration) ¶ 5. The second transcript, dated June 22, 2006, includes the assessments made by defendant o n December 29, 2005. Pl.'s Mem. 2; id. Ex. 5 (June 2006 Transcript) 3. The June 2006 T ra n sc rip t complies with the requirements of the regulation: It identifies the taxpayer by n a m e as "Intersport Fashions West Inc" and also provides plaintiff's Taxpayer Id e n tif ic a tio n Number. Pl.'s Mem. Ex. 5 (June 2006 Transcript) 2. It contains a column labe led "date" under which the date of each particular assessment appears. Id. at 2-3. It a ls o contains a column labeled "explanation" under which it identifies the character of the lia b ilitie s assessed. Id. The taxable period appears on the transcript as "Sept 2001." Id. at 2. Finally, the amounts of the assessments for the 2001 Tax Period appear under a c o lu m n labeled "money amount." Id. at 2-3. The June 2006 Transcript provided by d e f en d a n t to plaintiff satisfies the requirements of 26 C.F.R. § 301.6203-1. S ec o n d , plaintiff's contention that the assessments made against plaintiff are in v a lid due to the inadequacy of the documents provided to plaintiff by defendant is u n s u p p o rte d . See Pl.'s Resp. passim; Pl.'s Mem. passim. Plaintiff cites no legal a u th o rity, in the Treasury Regulations or otherwise, to suggest that the absence of the D e c em b e r 29, 2005 assessment on the first certificate provided by defendant invalidates th e subsequent certificate on which it did appear. Plaintiff also fails to cite any authority to suggest that defendant was obligated to provide an explanation to plaintiff regarding th e inconsistencies on the transcripts plaintiff received. Third, in prior cases with factual circumstances closely analogous to the c irc u m sta n c e s in this case, plaintiffs have been unsuccessful in claiming that assessments a g a in s t them were erroneous due to inadequacies of documents provided to them by the g o v e rn m e n t. In Howell v. United States (Howell), the documents provided to plaintiff d id not satisfy the regulatory requirements for supporting records because they did not c o n ta in the character of the liability assessed or the taxable period. Howell, 164 F.3d 9

5 2 3 , 525 (10th Cir. 1998). In discussing the government's failure to comply with the re q u ire m e n t to provide supporting records to a taxpayer, the court noted, "no section of th e Internal Revenue Code or the regulations imposes a sanction for the IRS's failure to c o m p ly with this provision." Id. at 526. The court went on to hold that "any failure by th e IRS to comply with its duty to provide the information set out in § 301.6203-1 did not re n d e r the assessment . . . invalid." Id. In Howell, defendant's documents did not satisfy tw o of the regulatory requirements. Id. at 525. In this case, although the December 29, 2 0 0 5 assessments did not appear on the April 2006 transcript, defendant's June 2006 T ra n sc rip t satisfied all of the regulatory requirements (as discussed above). In Howell, th e inadequacy of the documents was clearly more glaring than any inadequacy in this c a se but was still not found sufficient to render the assessment in that case invalid. In Young, the Court of Federal Claims stated that "even a notice [to plaintiff] that c o n ta in s technical defects is valid as long as the taxpayer has not been prejudiced or m is le d by the error and is afforded a meaningful opportunity to contest the assessment." Young, 62 Fed. Cl. at 605. In this case, while the April 2006 Transcript did not contain th e December 29, 2005 assessments, plaintiff could not have been misled or prejudiced b e c a u s e it received notice of the assessments when it received the June 2006 Transcript. See Pl.'s Resp. Ex. 1 (Affidavit of John L. Flynn) ¶ 9 (stating that plaintiff received the Ju n e 2006 Transcript which "showed entries . . . dated December 29, 2005"). Moreover, p la in tif f must be viewed as having had actual notice of the assessments for the 2001 Tax P e rio d as early as August 29, 2005, the date on which plaintiff entered into an agreement w ith defendant with respect to the assessments for the 2001 Tax Period "at the close of an IR S audit." Def.'s Reply 1, Ex. 1 (Agreement) 2. Whether the plaintiff had actual notice o f the additional assessments for the 2001 Tax Period as of August 29, 2005 or at the time it received the June 2006 Transcript, plaintiff has not persuasively argued that it was d e p riv e d of a "meaningful opportunity to contest the assessment." 1 See Young, 62 Fed.

The court notes that plaintiff also argues that "[d]ue to the delay of the IRS in responding [to plaintiff's requests made after receiving the transcript dated June 22, 2006 (June 2006 Transcript)], if there were, in fact, tax owed, and the [p]laintiff paid, it could not refile a claim due to expiration of the statute of limitations to file." Plaintiff's Memorandum of the Plaintiff in Support of its Motion to Deny United States Motion (plaintiff's Memorandum or Pl.'s Mem.) 2. Plaintiff's argument contending prejudice to plaintiff due to the delay of the Internal Revenue Service (IRS) in responding to plaintiff is unpersuasive for two reasons. First, as discussed in Part III.B.1.b of this opinion, the June 2006 Transcript comported with regulatory requirements under 26 C.F.R. § 301.6203-1 and was sufficient to provide plaintiff with notice that outstanding tax assessments had been timely made against plaintiff. See supra Part III.B.1.b. Therefore, plaintiff was notified that "there were, in fact, tax owed," Pl.'s Mem. 2, at the time (continued...) 10

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C l. at 605; see also Compl. ¶¶ 1-6 (describing the plaintiff's filing of protests with the IR S as to the 2001 Tax Period). In United States v. White (White), plaintiff pointed to several errors in defendant's F o rm 4340, none of which were sufficient to prove that the assessments in issue were e rro n e o u s. White, 466 F.3d 1241, 1249 (11th Cir. 2006). In White, the Form 4340 in a c cu ra te ly "show[ed] a balance of $0." Id. The court explained that "the reason for the e rro n e o u s balance was an error in the computer program that had completed the form." Id. More specifically, "the computer program assumed that the statute of limitations had e x p ire d because it did not recognize that [the running of the statute of limitations had b e e n delayed]." Id. In this case, while the reason that the December 29, 2005 a ss e ss m e n ts did not appear on the April 2006 Transcript was not due to an error, it was d u e to the specific technicalities in defendant's process for posting assessments. See D e f .'s Reply App. B (Mikkelsen Declaration) ¶ 5. The Mikkelsen Declaration explains th a t: T h e assessments made on December 29, 2005, were not reflected in the [ A p ril 2006 Transcript] because they had not posted to the master file a c co u n t. There are numerous reasons for an assessment not to post to the m a ste r file account. Until the [IRS] has resolved all unpostable situations re late d to an assessment, the assessment will not appear on the master file a c co u n t and, in turn, will not appear on the transcript of the account. Once th e [IRS] has resolved all the unpostable situations . . . the assessment a p p e a rs on the account.
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(...continued) plaintiff filed this complaint. Second, the court notes that the expiration of the statute of limitations to which plaintiff refers was a direct consequence of plaintiff's voluntary decision in this case. Because plaintiff filed a waiver of notice of disallowance, the statute of limitations in this case is governed by 26 U.S.C. § 6532(a)(3) and the two year statute of limitations began to run on the date on which plaintiff filed the waiver. 26 U.S.C. § 6532(a)(3) (2006). Plaintiff filed the waiver on November 7, 2005. Complaint (plaintiff's Complaint or Compl.), filed Oct. 22, 2007, ¶ 3; Answer (defendant's Answer or Answer), filed Feb. 19, 2008, ¶ 3. Therefore, plaintiff was required to file this action on or before November 7, 2007 in order not to be time barred. See 26 U.S.C. § 6532(a)(3). The court notes that if plaintiff had not filed a waiver of notice of disallowance, the statute of limitations would not have begun until the "date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance," 26 U.S.C. § 6532(a)(1), which in this case would have been May 26, 2006. Compl. ¶ 4; Answer ¶ 4. In short, the earlier expiration date of the statute of limitations in this case is due to plaintiff's decision to waive a notice of disallowance. Plaintiff's own decision undercuts plaintiff's argument of prejudice. 11

Id . In White, the court described the zero balance as "little more than a typographical e rro r" and the assessments were upheld as valid. White, 466 F.3d at 1249. An analogous a rg u m e n t could be made regarding the inconsistencies in the transcripts in this case, as th e y were similarly due to the mechanics of defendant's process of posting assessments. S im ilarly, in IRS v. Koff (Koff), the taxpayer opposed the validity of the government's ta x assessments against her because the computer printout which she received from the g o v e rn m e n t did not reflect any tax liability. Koff, No. S-00-CV-1954, 2002 WL 1 0 0 4 7 4 4 , at *4 (E.D. Cal. Mar. 18, 2002). In Koff, as in this case, defendant had s u b m itte d a Certificate of Assessments and Payments that established the validity of the a ss e ss m e n ts at issue. See id. The court in Koff accepted the government's argument that " to the extent the computer generated form [given to plaintiff] reflecting zero balances m a y be considered, . . . it merely reflects a clerical error resulting from the IRS computer n o t being coded to reflect the timely filing of the complaint in this action." Id. In this c a se , the absence of the December 29, 2005 assessments from the April 2006 Transcript w a s due solely to the administrative delay in the assessments being posted to the p la in tif f 's master file account. See Def.'s Reply App. B (Mikkelsen Declaration) ¶ 5. Plaintiff does not provide, and the court is not aware of, any legal authority that s u p p o rts plaintiff's claim that the inconsistency in the transcripts sent to plaintiff rebut the p re su m p tio n that the assessments made by defendant for the 2001 Tax Period were both tim e ly and valid. Plaintiff's arguments as to the inadequacy of the documents provided to it by the IRS are unpersuasive because: (a) the June 2006 Transcript comported with re g u lato ry requirements; (b) plaintiff offers no legal authority to substantiate its a rg u m e n ts ; and (c) case law does not support plaintiff's argument that the inconsistencies in the transcripts are sufficient rebut the presumption of validity. Therefore, the court f in d s that plaintiff has failed to present sufficient evidence to rebut the presumptive v a lid ity of the assessments, and concludes that a procedurally valid assessment was made b y defendant against plaintiff. 2. A p p lic a tio n of the Flora Full Payment Rule Precludes Jurisdiction Over P la in tif f 's Claims for the 2001 Tax Period

B e c a u se the Summary Record and Certificate clearly identify that assessments w e re made against plaintiff on December 29, 2005, and plaintiff has offered no evidence s u f f ic ie n t to rebut the presumptive validity of the assessments, plaintiff's refund action f o r the 2001 Tax Period is governed by the full payment rule. See Flora, 362 U.S. at 177; S h o re, 9 F.3d at 1526. The full payment rule requires this court to dismiss any claim for a re f u n d for a tax year with respect to which the assessed taxes have not been fully paid. Shore, 9 F.3d at 1526. Because plaintiff has outstanding tax liability for the 2001 Tax 12

P e rio d , the court must dismiss the case as to plaintiff's claims for the 2001 Tax Period. See id. In Flora, the Supreme Court made the prepayment of a tax deficiency a re q u ire m e n t to maintaining a refund action in federal district court. Flora, 362 U.S. at 1 7 7 . In Shore, the Federal Circuit applied what has become known as the "full payment ru le " to claims brought under 28 U.S.C. § 1491(a)(1) in the Court of Federal Claims. Shore, 9 F.3d at 1526.2 Plaintiff "does not dispute that full tax assessed must be paid to f ile a refund suit in the [United States] Court of Federal Claims." Pl.'s Mem. 2. Jurisdiction over refund actions in this court is "determined based on the circumstances as th e y exist at the time plaintiffs file their claim." Shore, F.3d at 1527. Plaintiff filed its C o m p la in t in this action on October 22, 2007. Compl. 1. Defendant has produced u n re b u tte d evidence that plaintiff had outstanding tax liability for the 2001 Tax Period as o f October 30, 2007. Def.'s Mot. Ex. 1 (Certificate) 1. Plaintiff also does not dispute th a t tax assessments against plaintiff were outstanding at the time plaintiff's Complaint w a s filed. See Pl.'s Mot. passim; Pl.'s Mem. passim. Plaintiff's only complaint as to the application of the full payment rule appears to b e that the rule "effectively require[s] [p]laintiff to have paid tax that may or may not h av e been valid in order to file a refund claim [in this court]." Pl.'s Mem. 3. Plaintiff's a rg u m e n t regarding the fairness of the jurisdictional system governing tax refund suits has b e e n squarely addressed both by the Supreme Court and by the Court of Federal Claims. In Flora, the Court addressed "the argument that requiring taxpayers to pay the full a ss e ss m e n ts before bringing suits will subject some of them to great hardship," Flora, 3 6 2 U.S. at 175, by stating that "this contention seems to ignore entirely the right of the taxp ayer to appeal the deficiency to the Tax Court without paying a cent," id. The Court The court notes that the issue of precisely which assessments plaintiff was required to prepay before bringing an action in this court, raised by Shore v. United States (Shore), is outside the scope of the questions presently at issue in this case because, unlike the plaintiffs in Shore, plaintiff in this case did not make any partial payments towards the outstanding tax principal, or penalties or interest for the tax period at issue before initiating this action. Cf. Shore, 9 F.3d 1524 (Fed. Cir. 1993). In Shore, plaintiffs were assessed tax deficiencies, along with interest and penalties for late payment of the tax. Id. at 1525. The Shore plaintiffs paid the assessed tax but did not pay either the interest or the penalties. Id. The court in Shore held that plaintiffs' refund claim as to the assessed tax was proper because plaintiffs had paid the tax assessment and therefore complied with the full payment rule as to the tax assessed. Id. at 1527. In this case, as in Estate of Akin v. United States (Akin), "because the Certificate [of Assessments and Payments, also referred to as the Form 4340] reflects a deficiency of . . . taxes, excluding interest and penalties, as of the date of the complaint, plaintiff[] ha[s] failed to satisfy the full payment rule. The court therefore lacks jurisdiction." See Akin, 31 Fed. Cl. 89, 96 (1994). 13
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w e n t on to underscore the government's "substantial interest in protecting the public p u rs e , an interest which would be substantially impaired if a taxpayer could sue in a D is tric t Court without paying his tax in full." Id. In Daniels, this court addressed the jurisdictional system governing tax refund s u its : [ T ] h e jurisdictional provisions . . . provide adequate fora for taxpayers and f o rm `a system in which there is one tribunal for prepayment litigation and a n o th e r for post-payment litigation' . . . . Thus, if a taxpayer is barred from b rin g in g , or does not wish to bring, suit in Tax Court, [28 U.S.C. §] 1 3 4 6 (a )(1 ) provides an alternative forum for a tax refund suit in either f e d e r a l district court or the [United States] Court of Federal Claims. D a n i e ls , 77 Fed. Cl. at 255 (quoting Flora, 362 U.S. at 163). In this case, as in Daniels, " to secure such [an alternative] forum[,] a taxpayer must pay the full amount of tax a ss e ss e d regardless of extraordinary circumstances and concomitant hardship." See id. P lain tiff has failed to show by a preponderance of the evidence that jurisdiction is p ro p e r. See Reynolds, 846 F.2d at 748. Because plaintiff has not satisfied the full p a ym e n t rule, this court lacks jurisdiction over plaintiff's claims with respect to the 2001 T a x Period. IV . C o n c lu s io n

F o r the foregoing reasons, the court DISMISSES plaintiff's claim as to the 2001 T a x Period for lack of subject matter jurisdiction. See RCFC 12(b)(1).

IT IS SO ORDERED. s/ Emily C. Hewitt EMILY C. HEWITT Judge

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