Stauffer v. Internal Revenue Service
Filing
31
Judge Mark L. Wolf: "1. The attached Report and Recommendation (Docket No. 29) is ADOPTED in part and MODIFIED in part, as described in this Memorandum and Order. 2. Defendant's Motion to Dismiss is DENIED without prejudice. 3. This case is REFERRED to the Magistrate for pretrial purposes, including a Report and Recommendation on any motion for summary judgment." ORDER entered denying 19 Motion to Dismiss for Lack of Jurisdiction; adopting in part Report and Recommendations re 28 Report and Recommendations. (Bono, Christine)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
HOFF STAUFFER, ADMINISTRATOR
OF THE ESTATE OF CARLTON
STAUFFER,
Plaintiff,
C.A. No. 15-10271-MLW
V.
INTERNAL REVENUE SERVICE,
Defendant.
MEMORANDUM AND ORDER
WOLF, D.J.
I.
September 29, 2017
INTRODUCTION
On April 26, 2013, Hoff Stauffer, as administrator of the
estate of his late father, Carlton Stauffer, (the "Estate") sought
a refund for overpaid taxes for the year ending on December 31,
2006. The claim was submitted past the October 15, 2010 deadline
applicable under 26 U.S.C. §6511. The Estate, however, submitted
a statement by Stauffer's treating psychologist alleging that
Stauffer had suffered from a "financial disability" that justified
suspension of the limitations period under 26 U.S.C. §6511(h)(2).
The IRS nevertheless denied the claim as untimely because the
psychologist's letter did not satisfy the requirement of Revenue
Procedure 99-21 that a person claiming financial disability submit
a statement from a "physician," which is defined as a "doctor of
medicine or osteopathy" and excludes psychologists.
The Estate sued. The IRS moved to dismiss, arguing that this
court lacks jurisdiction because the Estate did not properly file
its refund claim during the limitations period. On February 24,
2017, the Magistrate Judge issued a report recommending that the
motion be denied because the IRS did not justify its decision not
to consider the statement from Stauffer's psychologist as proof of
his disability. For the reasons explained below, the court is
adopting
in
part
and
modifying
in
part
the
Report
and
Recommendation, and the motion to dismiss is being denied.
II.
APPLICABLE LEGAL STANDARDS
A. Review of a Magistrate's Disposition
Rule 72(b)(3) of the Federal Rules of Civil Procedure requires
the court to review "de novo any part of the magistrate judge's
disposition that has been properly objected to." "Conclusory
objections that do not direct the reviewing court to the issues in
controversy" are not proper under Rule 72(b). Velez—Padro v. Thermo
King De Puerto Rico, Inc., 465 F.Sd 31, 32 (1st Cir. 2006).
Moreover, "[a party is] not entitled to a de novo review of an
argument never raised" before the magistrate judge. Borden v. Sec'y
of Health & Human Servs., 836 F.2d 4, 6 (1st Cir. 1987). "Parties
must take before the magistrate, 'not only their best shot but all
of their shots.'" Id. (quoting Singh v. Superintending Sch. Comm.
of City of Portland, 593 F. Supp. 1315, 1318 (D. Me. 1984).
Waiver of de novo review by failing to file proper objections
does not entitle a party to "some lesser standard" of review.
Thomas v. Arn, 474 U.S. 140, 149-50 (1985); see also Costa v. Hall,
2010 WL 5018159, at *17 (D. Mass. Dec.2, 2010) ("Absent objections,
the court may adopt the report and recommendation of the magistrate
judge."). However, review by the court in such circumstances is
not prohibited, and some level of oversight, even if not de novo,
is encouraged. See Henderson v. Carlson, 812 F.2d 874, 878 (3rd
Cir. 1987).
B. Motion to Dismiss for Lack of Jurisdiction
"There are two types of challenges to a court's subject matter
jurisdiction: facial challenges and factual challenges." TorresNegron v. J & N Records, LLC, 504 F. 3d 151, 162 (1st Cir. 2007).
"Facial attacks on a complaint 'require the court merely to look
and see if the plaintiff has sufficiently alleged a basis of
subject matter jurisdiction, and the allegations in [plaintiff's]
complaint are taken as true for purposes of the motion." Id.
However, when as in the case, the jurisdictional issue depends on
questions of fact, the court conducts one of two inquiries.
"[W]here...the jurisdictional issue and substantive claims are so
intertwined
the
resolution
of the
jurisdictional
question
is
dependent on factual issues going to the merits, the district court
should employ the standard applicable to a motion for summary
judgment." Id. at 163. In contrast, when as in this case,
the
facts relevant to the jurisdictional inquiry are not intertwined
with the merits of the plaintiff's claim...the trial court is free
to weigh the evidence and satisfy itself as to the existence of
its power to hear the case." Id.
C. Sovereign Immunity
"Under settled principles of sovereign immunity, the United
States, as sovereign, is immune from suit, save as it consents to
be sued...and the terms of its consent to be sued in any court
define that court's jurisdiction to entertain the suit." United
States V. Palm, 494 U.S. 596, 608 (1990). 28 U.S.C. §1346(a)
authorizes individuals to sue for a refund of taxes "erroneously
or illegally assessed or collected...under the internal revenue
laws." However, the Internal Revenue Code establishes the terms of
the consent given in §1346. Before suing, "the taxpayer must comply
with the tax refund scheme established in the Code," which provides
that "a claim for a refund must be filed with the Internal Revenue
Service (IRS) before suit can be brought, and establishes strict
timeframes for filing such a claim." United States v. Clintwood
Elkhorn Min. Co., 553 U.S. 1, 4 (2008).
In particular, 26 U.S.C. §7422(a) specifies that:
No suit or proceeding shall be maintained in any court
for the recovery of any internal revenue tax alleged to
have
been
erroneously
or
illegally
assessed
or
collected...until a claim for refund or credit has been
duly filed with the [IRS], according to the provisions of
law in that regard, and the regulations of the Secretary
[of the Treasury] established in pursuance thereof.
In C.I.R. V. Lundy, the court explained the time limits for filing
a claim for a refund with the IRS;
[26 U.S.C. §6511] contains two separate provisions for
determining the timeliness of a refund claim. It first
establishes a filing deadline: The taxpayer must file a
claim for a refund "within 3 years from the time the
return was filed or 2 years from the time the tax was
paid, whichever of such periods expires the later, or if
no return was filed by the taxpayer, within 2 years from
the time the tax was paid." §6511(b)(1) (incorporating by
reference §6511(a)).
516 U.S. 235, 239-40 (1996). As explained below, the Estate filed
its tax return for the year 2006 and its claim for a refund on
April 26, 2013. Therefore, the refund claim was timely under
section 6511(b)(1).
However, the statute also establishes a "look-back" period.
If the taxpayer files the refund claim within 3 years from the
time the return was filed, the taxpayer is entitled to a refund
only of the taxes he paid within the three years (plus the period
of any extension for filing the return) before he filed the claim.
See §6511(b)(2)(A).
"Although [courts] should not construe such [] time-bar
provision[s] unduly restrictively, [they] must be careful not to
interpret [them] in a manner that would extend the waiver [of
sovereign immunity] beyond that which Congress intended." Palm,
494 U.S. at 608. Therefore, the Supreme Court has held that "unless
a claim for refund of a tax has been filed within the time limits
imposed by §6511(a), a suit for refund...may not be maintained in
any court." Clintwood Elkhorn, 553 U.S. at 5. Accordingly, courts
may not "toll, for non-statutory equitable reasons, the statutory
time...limitations
for
filing
tax
refund
claims
set
for
in
[§6511]." United States v. Brockamp, 519 U.S. 347, 348 (1997).
Therefore, absent some form of tolling, a claimant cannot, by
filing a claim in 2013, obtain a refund for taxes paid in 2006.
26 U.S.C. §6511(h) provides for statutory tolling of the 3-
year limitations period in limited circumstances. In particular,
the
time
limit for
submitting
a
claim
to
the
IRS "shall
be
suspended during any period of [an individual taxpayer's] life
that
such
individual
is
financially
disabled."
26
U.S.C.
§6511(h)(l). An individual is "financially disabled" if he is
"unable to manage his financial affairs by reason of a medically
determinable physical or mental impairment of the individual which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months." 26 U.S.C. §6511(h){2)(A). However, "an individual shall
not be considered to have such an impairment unless proof of the
existence thereof is furnished in such form and manner as the
Secretary may require." Id.
Revenue Procedure 99—21 "sets forth in detail the 'form and
manner' in which proof of financial disability must be provided."
Bova V. United States, 80 Fed. Cl. 449, 455 (2008). It requires an
6
individual claiming financial disability to submit "a
written
statement by a physician (as defined in §1861(r)(1) of the Social
Security
Act,
42
U.S.C.
determination" that the
§1395x(r)),
qualified
individual satisfied
to
make
the definition
the
of
"financially disabled" in 26 U.S.C. §6511(h). Rev. Proc. 22-91, §4
(emphasis added). Revenue Procedure 99-21 does not itself define
"physician" for the purposes of its requirements. Instead, it
refers to the definition as established in §1861(r)(1) the Social
Security Act, 42 U.S.C. §1395x(r).
42 U.S.C. §1395x(r) defines the term "physician" as including
five enumerated categories of professionals. The first enumerated
category, which corresponds to §1861(r)(1) of the Social Security
Act, is "a doctor of medicine or osteopathy legally authorized to
practice medicine and surgery by the State in which he performs
such
function
or
action
(including
["osteopathic
practitioners...within the scope of their practice as defined by
state law," 42 U.S.C. §1301(a)(7)])." The parties agree that this
definition excludes psychologists.
Therefore, Revenue Procedure 99-21, incorporating 42 U.S.C.
§1395x(r), provides that a taxpayer seeking tolling of the 3-year
statute of limitations for filing a
refund claim based on a
"financial disability" must submit a letter from a qualified
"doctor of medicine or osteopathy legally authorized to practice
medicine and surgery," to prove the taxpayer's disability.
III. RELEVANT FACTS
The court adopts the facts as recited in the Magistrate
Judge's Report and Recommendation and supplemented by the record,
which are undisputed. See R&R at 2-7.
On October 29, 2012, Carlton Stauffer died at the age of 90.
His son, Hoff Stauffer, became the administrator of his estate.
While closing the Estate, Hoff Stauffer discovered that his father
had not filed tax returns for the tax years 2006 through 2012.
Accordingly, on April 26, 2013, Hoff Stauffer filed those returns
with the IRS. Stauffer claimed that his father overpaid taxes for
the 2006 tax year in the amount of $137,403. He requested a refund
for the Estate in that amount.
On February 18, 2014, the IRS denied the claim for a refund
as untimely pursuant to 26 U.S.C. §6511. Stauffer filed an internal
appeal. In it, he alleged that the IRS was required to toll the
statute of limitations, under 26 U.S.C. §6511(h), because his
father had been "financially disabled" during the relevant period.
In particular, Stauffer submitted an April 9, 2014 certified
statement from Carlton's psychologist.
Dr. Stanley Schneider,
Ed.D., who had treated him from 2001 until his death in 2012. Dr.
Schneider wrote that Carlton Stauffer suffered from "psychological
problems," in addition to "a variety of chronic ailments, including
congestive heart failure, chronic obstructive pulmonary disease,
leukemia,
and
chronic
pneumonia."
8
Objection,
Ex.
2.
These
conditions, he opined, "severely and negatively impacted" Carlton
Stauffer's
"mental
capacity,
cognitive
functioning,
decision
making, and emotional well-being," and prevented him from managing
his financial affairs from at least 2006 until his death. Id.
Nevertheless, on December 2, 2014, the IRS preliminary denied
the Estate's appeal and rejected its claim. The IRS did not
determine
whether
Carlton
Stauffer
was
"financially
disabled"
during the relevant period. Instead, the agency stated that because
Dr. Schneider was not a "physician" as defined in Revenue Procedure
99-21, his letter "cannot be used as a statement that can certify
Mr. Stauffer's condition." Compl. at Sill. On January 7, 2015, the
IRS formally denied the Estate's claim for a refund as untimely.
IV.
PROCEDURAL BACKGROUND
The Estate alleges that the provision in Revenue Procedure
99-21 applied by the IRS to preclude consideration of a letter
from a treating
financial
psychologist in determining
disability
consideration
of
"unreasonably
credible,
relevant
an individual's
limits
evidence
[the
of
IRS's]
financial
disability." Compl. at SI13. It seeks a judgment in the amount of
the
Estate's
overpayment
for
the
year
2006,
plus
interest,
litigation costs, and attorney's fees. The IRS moved to dismiss
the complaint. See Docket No. 19. The IRS argued that the suit is
barred by sovereign immunity because the Estate failed to file a
timely claim for a refund with the agency. The court referred the
case to the Magistrate Judge for pretrial purposes and a Report
and Recommendation on the motion.
On February 14, 2017, the Magistrate Judge issued his report
and recommended that the motion be denied.
V.
DISCUSSION
As explained earlier, courts do not have jurisdiction over a
tax refund suit "until a claim for refund or credit has been duly
filed with the Secretary, according to the provisions of law in
that regard." Abston v. C.I.R., 691 F.3d 992, 995 {8th Cir. 2012).
Section §6511(h)(2)(A)
is
such
a "provision
of law." I^ It
expressly provides that a taxpayer 'shall not be considered
[financially disabled] unless proof of [a disabling impairment] is
furnished in such form and manner as the Secretary
of the
Treasury, through the IRS, and not the court, "'may require.
Abston, 691 F. 3d at 995. By Revenue Procedure 99-21, the IRS
"requires" that a refund claim must be submitted in a particular
"manner:" with a doctor's note attached. Therefore, to be "duly
filed" as required by the terms of the Internal Revenue Code's
limited waiver of sovereign immunity, an untimely refund claim
must be submitted with a letter from a medical doctor. Id. at 995.
Accordingly, in Abston, the Eighth Circuit held that a
district court must dismiss a refund suit in which the taxpayer
did not substantially comply with Revenue Procedure 99-21. There,
as here, the plaintiff failed to submit a physician's statement,
10
as required by Revenue Procedure 99-21, to the IRS with her request
for a refund. The court reasoned that the court cannot disregard
a lawfully-promulgated revenue procedure to toll the statute of
limitations, because doing so would:
be the kind of non-statutory tolling the Supreme Court
barred
in
Brockamp.
The
administrative
burden
of
responding to late claims, the Court explained, "tells us
that Congress would likely have wanted to decide
explicitly whether, or just where and when, to expand the
statute's limitations periods, rather than delegate to
the courts a generalized power to do so whenever a court
concludes that equity so requires."
Id. at 995-96 (citing Brockamp, 519 U.S. at 353). Judicial waiver
of a lawfully promulgated IRS filing requirement would be "contrary
to that principle and therefore beyond the power of the lower
federal courts." Id.
Under
the
Administrative
Procedure
Act,
5
U.S.C.
§706,
however, a court may set aside an agency action, finding, or
conclusion
when
it
was
"arbitrary,
capricious,
an
abuse
of
discretion, or otherwise not in accordance with law." F.C.C. v.
Fox Television Stations, Inc., 556 U.S. 502, 513 (2009)(citing
Motor Vehicles Mfrs. Ass'n of U.S. v. State Farm Ins. Co., 463
U.S. 29, 43 (1983)). The Estate argues, in effect, that the IRS's
decision
to
exclude
a
psychologist's
letter
as
evidence
of
financial disability is arbitrary and capricious and, therefore,
the court should set it aside. Because the government has offered
no evidence that the IRS had a reason that was not arbitrary for
11
excluding
psychologists
from
the
category
of
professionals
qualified to support a claimant's financial disability, the court
is denying the motion to dismiss.
The court's analysis, however, differs from the Magistrate
Judge's. The Magistrate Judge applied the standard established in
Skidmore v. Swift & Co., 323 U.S. 134 (1944), to determine that
the IRS's limitation on cognizable experts to medical doctors
rather than other "professionals generally considered competent to
opine on the existence of a mental impairment" was not entitled to
"deference." R&R at 12. Under United States v. Mead Corp., 533
U.S. 218, 229-31 (2001), an agency's interpretation of the statute
it is authorized to implement, when the interpretation is contained
in an informal guidance document instead of a formal regulation
carrying the force of law, warrants judicial deference only to the
extent that it has the "power to persuade" according to the factors
discussed in Skidmore. See Merrimon v. Unum Life Ins. Co. of
America, 758 F. 3d 46, 54-55 (1st Cir. 2014).^ If the agency's
interpretation does not warrant deference, the court applies its
own interpretation of the statute. See King v. Burwell, 135 S. Ct.
2480, 2489 (2015).
1 These factors include the "thoroughness evident in the guidance's
consideration,
the
validity
of
its
reasoning,
consistency with earlier and later pronouncements."
(citing Skidmore, 323 U.S. at 140).
12
[and]
its
at 99
The
Estate,
correctly,
does
not
argue
that
the
revenue
procedure misinterprets §6511(h). The statute authorizes the IRS
to establish the "form and manner," that is, the procedure, by
which refund claimants must submit proof of their disability. A
procedural rule is one which "do[es] not [it]self alter the rights
or interests of the parties, although it may alter the manner in
which the parties present themselves or their viewpoints to the
agency." Nat'1 Sec. Counselors v. C.I.A., 931 F. Supp. 2d 77, 10607 (D.D.C. 2013). A procedural rule generally may not "encode []
a substantive value judgment or put[] a stamp of approval or
disapproval on a given type of behavior," but "the fact that the
agency's decision was based on a value judgment about procedural
efficiency does not convert the resulting rule into a substantive
one." Id. at 107. "Rules are generally considered procedural so
long as they do not 'change the substantive standards by which the
[agency] evaluates' applications which seek a benefit that the
agency has the power to provide." JEM Broadcasting Co., Inc. v.
F.C.C., 22 F. 3d 320, 327 (D.C. Cir. 1994).
The Estate does not argue that Revenue Procedure 99-21 is not
a procedural rule. It establishes a rule of evidence—a requirement
that the expert certifying the claimant's condition possess a
certain qualification. The rule does not change the substantive
standard by which the IRS determines whether an individual is
financially disabled.
13
Agencies,
including
the
IRS,
have
especially
"broad
discretion to decide what procedures to use in fulfilling [their]
statutory responsibilities." New Life Evangelistic Center, Inc. v.
Sebelius,
753
F.
Supp.
2d
103,
121
(D.D.C.
2010).
"Absent
constitutional constraints or extremely compelling circumstances'
courts are never free to impose on [an agency] a procedural
requirement not provided for by Congress." Nat. Res. Def. Council,
Inc. V. Nuclear Regulatory Comm'n, 216 F.3d 1180, 1190 (D.C. Cir.
2000);
Vermont
Yankee
Nuclear
Power
Corp.
v.
Nat.
Res.
Def.
Council, Inc., 435 U.S. 519, 54 (1978)(stating that a court may
not "impose upon the agency its own notion of which procedures are
'best' or most likely to further some vague, undefined public
good"). This principle has special force here, where Congress has
explicitly given the IRS the
authority to adopt procedural
requirements with which individuals claiming financial disability
must comply. The court may not, therefore, require the IRS to
accept forms of evidence or manners of proof that the agency, in
a valid exercise of its authority, has foreclosed.
However, Vermont Yankee did not exempt from judicial review
procedural requirements that the agency does choose to impose. In
Allentown Mack Sales and Service, Inc. v. NLRB, for example, the
court held that an agency, in conducting an adjudication, must
apply the substantive standards, as well as the standards of proof,
that it has explicitly adopted. 522 U.S. 359, 378 (1998). In doing
14
so, the Court stated that "clearly announced rules of law or of
evidentiary exclusion [are] subject to judicial review for their
reasonableness
and
their
compatibility
with
[the
governing
statutes]." Id.^ The court stated that this includes "a rule of
evidence that categorically excludes certain testimony on policy
grounds, without reference to its inherent probative value." Id.
Revenue
Procedure
99-21,
which
categorically
excludes
opinion
testimony from non-medical doctors, is such a rule. Therefore, the
court may review the "reasonableness" of such rules according to
2 The court recognizes that a decision committed by statute to an
agency's discretion may be subject to more limited review than the
standard established in 5 U.S.C. §706(2)(A). ^ Webster v. Doe,
486 U.S. 592, 599 (1988)(explaining that 5 U.S.C. §701(a) precludes
APA review where Congress "expressed an intent to preclude judicial
review" under the APA and "in those rare instances where statutes
are drawn in such broad terms that in a given case there is no law
to apply")/ see also Hinck v. United States, 550 U.S. 501, 503—04
(2007)(recognizing that statutory provision providing that the
Secretary of the Treasury "may abate the assessment of all or any
part of...[the] interest" on "any [tax] deficiency attributable
to an IRS error committed the abatement decision to the Secretary's
unreviewable discretion because the provision "neither indicat[ed]
that such authority should be used universally nor provid[ed] any
basis for distinguishing between the instances in which abatement
should and should not be granted"). The government does not argue,
however, that 26 U.S.C. §6511(h)
vests the
IRS
with such
unreviewable discretion to establish the "form and manner
of proof
of impairment. Because the APA establishes a "presumption of
reviewability for all final agency action," U.S. Army Corps of
Engineers v. Hawkes Co., Inc., 136 S. Ct. 1807, 1811 (2016), and
the implied preclusion of judicial review is "rare," Webster, 486
U.S. at 599, it would be inappropriate for the court to find that
§6511(h) precludes judicial review at this stage, absent briefing
on the issue.
15
the deferential "arbitrary and capricious" standard established in
5 U.S.C. §706(2)(A).
In State Farm, the Court explained that the "arbitrary and
capricious" standard is "narrow, and a court is not to substitute
its judgment for that of the agency." 463 U.S. at 43.
Nevertheless, the agency must examine the relevant data
and articulate a satisfactory explanation for its action
including a "rational connection between the facts found
and the choice made." In reviewing that explanation, we
must "consider whether the decision was based on a
consideration of the relevant factors and whether there
has been a clear error of judgment." Normally, an agency
rule would be arbitrary and capricious if the agency has
relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect
of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or
is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.
Id. In addition, the agency must have a reasoned explanation for
rejecting the "reasonably obvious alternatives" available to it.
National Shooting Sports Foundation, Inc. v. Jones, 716 F. 3d 200,
215 (D.C. Cir. 2013). The reviewing court "may not supply a
reasoned basis for the agency's action that the agency itself has
not given." State Farm, 463 U.S. at 43. However, it must uphold
even a "decision of less than ideal clarity if the agency s path
may be reasonably discerned." Fox Television Stations, 556 U.S. at
513-14.
In Abston, the Eighth Circuit reasoned that Revenue Procedure
99-21's requirement that claimants submit a doctors' statement was
16
valid "under any standard of judicial review of executive agency
action:"
Congress defined "financial disability" as meaning that an
individual "is unable to manage his financial affairs by
reason of a medically determinable physical or mental
impairment." Knowing that the IRS would need to fairly and
efficiently process a potentially large number of such
claims. Congress instructed the Secretary to prescribe the
method by which an individual could prove such an impairment.
In
Revenue
Procedure
99—21,
the
Secretary
logically
prescribed, "Bring a doctor's note."
Abston, 691 F. 3d at 996 {citing §6511(h)(2)(A)). However, as the
Magistrate Judge noted, in Abston, the plaintiff had failed to
submit a statement by any doctor at all. Accordingly, the Eighth
Circuit
did
not
consider
whether
the
IRS's
decision
to
categorically refuse to consider certain types of doctors' notes-
-and in particular, statements from treating psychologists—is
arbitrary, capricious, or an abuse of discretion under 5 U.S.C.
§706(2)(A).
As explained earlier, the agency must explain why it rejected
"reasonably obvious" alternatives to the challenged rule. National
Shooting Sports Foundation, 716 F. 3d at 215. It is not "obvious"
why, in establishing a standard for proving mental disability, the
IRS would limit the types of doctors from whom it will accept
certifying statements to those defined as "physicians
for the
purposes of collecting Medicaid payments under the Social Security
Act,
42
U.S.C.
§1395x(r),
and
exclude
a
psychologist
who
contemporaneously diagnosed and treated the individual. Section
17
1395x(r} does not restrict the types of professionals who may opine
on whether a person has a disability for the purpose of determining
whether he is entitled to Disability Insurance Benefits.^ See 20
C.F.R. 404.1527(a)(2) (effective August 24, 2012 to March 26,
2017)("Medical
opinions
are
statements
from
physicians
and
psychologists or other acceptable medical sources that reflect
judgments about the nature and severity of your impairment(s)). In
fact, in the Social Security context, the opinion of a treating
psychologist is entitled to great weight. See Hill v. Astrue, 698
F. 3d 1153, 1159-60 (9th Cir. 2012)(Administrative law judge erred
in
rejecting opinion of treating
psychologist in disability
benefits hearing).
The government, however, has not submitted any evidence of
the
IRS's rationale in
adopting the
definition in 42 U.S.C.
§1395x(r). R&R at 15. The IRS, therefore, has not provided any
explanation for its decision, let alone a "rational connection
between the facts found and the choice made." State Farm, 463 U.S.
at 43. The IRS may conceivably view doctors without medical degrees
to be generally unqualified to make the determination required
under section 6511, and may have determined that, in view of the
"need to fairly and efficiently process a potentially large number
3
As
the
Magistrate
Judge
explained,
the
Social
Security
Administration and the IRS's definitions of "disability" are, in
relevant part, identical. Compare 42 U.S.C. §423(d)(1)(A) with 26
U.S.C. §6511(h)(2)(A).
18
of [refund] claims," Abston, 691 F. 3d at 996, a case-by-case
determination
of
whether
a
given
psychologist is
nevertheless
qualified is unwarranted. However, as explained earlier, at least
where the IRS's reasoning is not obvious, the court may not supply
an explanation for the IRS's choice that the agency itself has not
given. See State Farm, 463 U.S. at 43.
The
government
argues,
in
the
alternative,
that
the
Magistrate Judge erred in rejecting its argument that the Estate's
claim
was
untimely filed for the additional reason that the
psychologist's letter was filed with the Estate's initial appeal,
and not with the refund claim, as required by Revenue Procedure
99-21, §4. The Magistrate Judge, however, correctly found that
"where refund claims may technically be deficient by virtue of
missing some piece of information," courts generally "accept the
missing information at a later stage so it and the taxpayer's claim
may be considered." Report and Recommendation at 17 n. 4 (citing
Abston, 691 F.3d at 995 (where claim for refund was denied as
untimely for failure to submit certain information, plaintiff
permitted on appeal to IRS to submit the missing information) and
Walter v. United States, 2009 WL 5062391, at *10 (W.D.P.A. Dec.
16, 2009)("No case has ever held that a treating physician's
statement that contains a technical deficiency that is easily
corrected is insufficient under 6511(h). On the contrary, there is
a doctrine of allowing informal refund claims that are 'deficient
19
merely in one or two of the technical requirements imposed by the
Treasury regulation.
'
.
The IRS does not contest that Dr. Stanley Schneider's letter
establishes
"financial
that
Carlton
disability"
Stauffer's
sufficient
to
impairments
suspend
constituted
the
a
limitations
period for filing his refund claim under 26 U.S.C. §6511(h).
Therefore, the motion to dismiss is being denied without prejudice.
If the government possesses evidence that the IRS considered
reasonably obvious alternatives in excluding psychologists from
the definition of "physicians" in Revenue Procedure 99-21, or if
it believes that the court lacks authority to review the Revenue
Procedure for the reasons discussed supra, at n. 2, it may submit
such evidence or argument with a motion for summary judgment.
VI.
ORDER
1.
The attached Report and Recommendation (Docket No. 29)
is ADOPTED in part and MODIFIED in part, as described in this
Memorandum and Order.
2.
Defendant's
Motion
to
Dismiss
is
DENIED
without
prejudice.
3.
This case is REFERRED to the Magistrate for pretrial
purposes, including a Report and Recommendation on any motion for
summary judgment.
20
(^1
UNITED STATES DISTRICT JUDGE / J
21
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 1 of 18
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
Hoff Stauffer, Administrator of
the Estate of Carlton Stauffer,
Plaintiff,
No. 15-CV-10271-MLW
v.
Internal Revenue Service,
Defendant.
REPORT
AND
RECOMMENDATION
ON
DEFENDANT UNITED STATES’ MOTION
(DKT. NO. 19)
TO
DISMISS
CABELL, U.S.M.J.:
This matter comes before the Court on the United States’
Motion to Dismiss.1
(Dkt. No. 19).
Hoff Stauffer (“the plaintiff”
or Stauffer) is the administrator of the estate of his late father,
Carlton Stauffer.
In 2013, Stauffer filed several years’ worth of
estate tax returns with the United States Internal Revenue Service
(the IRS or “the defendant”), and requested for the 2006 tax year
a refund for an overpayment of more than $100,000.
the claim as untimely under the statute.
The IRS denied
The plaintiff concedes
that he filed the refund claim late but argues that the limitations
1
Though the complaint names the Internal Revenue Service, the proper defendant
in civil actions for federal tax refunds is the United States. See 28 U.S.C.
§ 1346(a)(1).
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 2 of 18
period was tolled because his father was financially disabled
during the relevant period.
The defendant argues that the failure
to comply with the statute’s timing requirements divests the Court
of subject matter jurisdiction.
For the reasons discussed below,
I recommend that the defendant’s motion to dismiss be denied.
I.
RELEVANT FACTS
The relevant facts framing the lawsuit are apparently not in
dispute.
Carlton Stauffer passed away in October 2012 at the age
of 90 and the plaintiff became the administrator of the estate.
(Compl. ¶¶ 5-6).
In the course of fulfilling that role the
plaintiff discovered that his father had neglected to file tax
returns for the tax years 2006 through 2012. (Compl. ¶ 6). Seeking
to rectify the delinquency, the plaintiff filed the outstanding
returns on or about April 26, 2013.
(Compl. ¶ 7).
Relevant here,
the estate claimed that it overpaid taxes for the 2006 tax year by
$137,403, and the plaintiff accordingly requested a refund for
that amount.
(Compl. ¶ 7).
On or about February 18, 2014, the IRS denied the request for
refund as untimely under 26 U.S.C. § 6511.
(Compl. ¶ 8).
The
plaintiff pursued the claim via the IRS’s internal appeals process.
(Compl. ¶ 8).
The IRS will excuse a late filing if the taxpayer
was “financially disabled.”
26 U.S.C. § 6511(h).
In that regard,
the plaintiff submitted a written explanation from a licensed
psychologist who had previously treated Carlton Stauffer from 2001
2
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 3 of 18
until his death in 2012.
(Compl. ¶ 9).
The psychologist’s
explanation detailed a variety of mental and physical conditions
which, he opined, had prevented Carlton Stauffer from managing his
financial affairs from at least 2006 until his death.
(Id.).
By letter dated December 2, 2014, the IRS preliminarily
rejected the plaintiff’s claim.
(Compl. ¶ 11).
The IRS stated
that while it will accept an explanation from a “physician,” a
psychologist is not a physician under the definition contained in
Revenue Procedure 99-21.
(Compl. ¶¶ 11-12).
On January 7, 2015,
the IRS formally denied the plaintiff’s claim for a refund.
(Compl. ¶ 14).
II.
PROCEDURAL HISTORY
The plaintiff filed this action on February 5, 2015.
The
complaint asserts jurisdiction pursuant to 26 U.S.C. § 7422, 28
U.S.C. §§ 1402, 1349, 1346 and 1331, and seeks a judgment for the
amount of the overpayment for the year 2006, plus interest,
litigation
costs
and
attorney’s
fees.
On
May
3,
defendant moved to dismiss for lack of jurisdiction.
2016,
the
On May 17,
2016, the plaintiff opposed the motion.
III. LEGAL STANDARD
The
defendant
argues
that
the
court
lacks
jurisdiction
because the plaintiff’s claim for refund was untimely under the
pertinent statute.
A plaintiff bears the burden of proving that
the court has jurisdiction.
O'Toole v. Arlington Trust Co., 681
3
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 4 of 18
F.2d 94, 98 (1st Cir. 1982).
Generally, a court should apply a
standard of review “similar to that accorded a dismissal for
failure to state a claim” under Rule 12(b)(6).
Specialty
Ins.
Co., 905
F.Supp.2d
414,
Menge v. N. Am.
416
(D.R.I.
2012)
(quoting Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995).
A court confronted with a Rule 12(b)(6) motion “may dismiss a
complaint only if it is clear that no relief could be granted under
any
set
of
allegations.”
facts
that
could
be
proved
consistent
with
the
Educadores Puertorriquenos en Accion v. Hernandez,
367 F.3d 61, 66 (1st Cir. 2004) (quoting Hishon v. King & Spalding,
476 U.S. 69, 73 (1984)).
To show that one is entitled to relief,
the plaintiff must provide “enough facts to state a claim to relief
that is plausible on its face.”
U.S. 544, 570 (2007).
Bell Atl. Corp. v. Twombly, 550
A court must “accept as true all well-
pleaded facts set forth in the complaint and draw all reasonable
inferences therefrom in the pleader’s favor.”
Haley v. City of
Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quoting Artuso v. Vertex
Pharmaceuticals, Inc., 637 F.3d 1, 5 (1st Cir. 2011)). In deciding
Rule 12(b)(1) motions, however, the court may consider materials
outside the pleadings, and factual disputes may be resolved.
Gonzalez v. United States, 284 F.3d 281, 288 (1st Cir. 2002);
Valentin v. Hospital Bella Vista, 254 F.3d 358, 363 (1st Cir.
2001).
4
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 5 of 18
IV.
LEGAL FRAMEWORK
FOR
TAX REFUND CLAIMS
A taxpayer seeking a refund of taxes erroneously or unlawfully
collected may bring a federal court action against the United
States.
28 U.S.C. § 1346(a)(1).
The Internal Revenue Code
specifies that before doing so, though, the taxpayer must comply
with the tax refund scheme established in the Code.
v. Dalm, 494 U.S. 596, 609–610 (1990).
United States
That scheme provides that
a claim for a refund must be filed with the IRS before suit can be
brought, and establishes strict timeframes for filing such a claim.
United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 4 (2008).
In particular, civil claims for tax refunds are governed by
26 U.S.C. § 7422.
Pursuant to that statute, “[n]o suit or
proceeding shall be maintained… until a claim for refund or credit
has been duly filed with the Secretary.”
26 U.S.C. § 7422.
To be
duly filed under section 7422, a claim for refund must in turn be
timely under 26 U.S.C. § 6511.
144, 149 (1st Cir. 2011).
Dickow v. United States, 654 F.3d
To be timely under section 6511, a claim
for refund “shall be filed by the taxpayer within 3 years from the
time the return was filed or 2 years from the time the tax was
paid, whichever of such periods expires the later, or if no return
was filed by the taxpayer, within 2 years from the time the tax
was paid.”
26 U.S.C. § 6511(a).
Applied here, both parties agree
that a claim for refund for the tax year 2006 would have properly
been filed within three years of the original April 15, 2007 filing
5
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 6 of 18
deadline, or April 15, 2010, but Carlton Stauffer had received an
automatic six-month extension, so the deadline would have been
October 15, 2010.
refund
until
The plaintiff did not submit his claim for
April
26,
2013,
well
beyond
the
deadline
and
limitations period.
However, section 6511(h) provides that the time limit for
submitting a claim “shall be suspended during any period of such
individual’s life that such individual is financially disabled.”
26 U.S.C. § 6511(h)(1).
An individual is “financially disabled”
if he is “unable to manage his financial affairs by reason of a
medically determinable physical or mental impairment” expected to
result
in
death
6511(h)(2)(A).
or
last
at
least
12
months.
26
U.S.C.
§
One claiming a financial disability must provide
proof of its existence “in such form and manner as the Secretary
may require.”
Id.
Revenue Procedure 99-21 “sets forth in detail the ‘form and
manner’ in which proof of financial disability must be provided.”
Bova v. United States, 80 Fed. Cl. 449, 455 (Fed. Cl. 2008).
Among
other things, and relevant here, Revenue Procedure 99-21 provides
that one claiming a financial disability must submit “a written
statement by a physician (as defined in § 1861(r)(1) of the Social
Security
Act,
determination…”
Revenue
42
U.S.C.
§
1395x(r)),
qualified
to
R.P. 99-21, § 4(1) (emphasis added).
Procedure
99-21
does
not
6
itself
define
make
the
As such,
the
term
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 7 of 18
“physician,” but instead borrows a definition of the term as used
by the Social Security Administration (SSA).
As an initial matter, it is not patently obvious what the IRS
deems the definition of “physician” to be in this context.
The
revenue procedure refers to section “1861(r)(1)” but that is
confusing because section 1861(r) does not formally contain any
subsections.
Rather, section 1861(r) sets out in one large
paragraph a definition for the term “physician” that includes five
enumerated categories of professionals, including:
(1) “a doctor
of medicine or osteopathy,” (2) “a doctor of dental surgery or of
dental medicine,” (3) a doctor of podiatric medicine,” (4) “a
doctor of optometry,” and (5) “a chiropractor.” See § 1861(r).
Assuming as a matter of common sense that the IRS’s reference to
a
subsection
category,
one
some
is
meant
confusion
to
refer
still
to
remains
the
first
because
enumerated
the
revenue
procedure directly links section “1861(r)(1)” to “42 U.S.C. §
1395x(r)” --a statute that essentially tracks verbatim the wording
and format of section 1861(r), but does not contain a corresponding
reference to a subsection one.
Indeed, section 1395x(r), like
section 1861(r), does not formally contain any subsections.
So,
is the reference to a subsection one in section 1861(r)(1) a
scrivener’s error, or is it meant to purposely narrow the scope of
the meaning of a physician to a doctor of medicine or osteopathy?
If it is the latter, why does not the reference to section 1395x(r)
7
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 8 of 18
also refer to a subsection one?
when
one
considers
principally
by
that
one
IRS
The ambiguity is not lessened
Revenue
employee
Procedure
and
99-21
does
not
was
drafted
contain
any
accompanying rationale explaining the choice of the definition of
the word “physician.”2 It is not necessary for the Court to resolve
this question here, though, because both parties agree that,
whatever definition of “physician” controls, it does not facially
include a psychologist.
V.
ANALYSIS
A revenue procedure is a “statement of procedure that affects
the rights or duties of taxpayers or other members of the public
under the Code and related statutes or information that, although
not necessarily affecting the rights and duties of the public,
should
be
a
matter
601.601(d)(2)(i)(b).
of
public
knowledge.”
26
C.F.R.
§
The stated purpose of Revenue Procedure 99-
21 is to “describe[] the information that is required under §
6511(h)(2)(A) of the Internal Revenue Code in order to request
suspension of the period of limitations under § 6511 for claiming
a credit or refund of tax due to an individual taxpayer’s financial
disability.”
See R.P. 99-21, § 1.
2
At the end of RP 99-21, and under the heading “DRAFTING INFORMATION,” one is
informed that “[t]he principal author of this revenue procedure is Paul E.
Tellier of the Office of Assistant Chief Counsel (Income Tax and Accounting).”
8
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 9 of 18
“An agency’s interpretation of a statute that it administers
may warrant judicial deference, depending on the degree to which
the
agency’s
authoritative.”
exposition
of
the
issue
is
deemed
Merrimon v. Unum Life Ins. Co. of America, 758
F.3d 46, 54 (1st Cir. 2014).
Agencies speak in a variety of ways,
and therefore authoritativeness often depends on context.
Id.
On
the one hand, when an agency speaks with the force of law, the
agency’s
interpretation
is
due
judicial
deference,
known
as
Chevron deference, as long as its interpretation is reasonable.
Id.
See also Chevron U.S.A., Inc. v. Natural Resources Defense
Council, 467 U.S. 837 (1984).
But when an agency speaks with
something less than the force of law its interpretations are not
entitled to Chevron deference.
See Christensen v. Harris County,
529 U.S. 576, 587 (2000) (“Interpretations such as those in opinion
letters—like
interpretations
contained
in
policy
statements,
agency manuals, and enforcement guidelines, all of which lack the
force of law—do not warrant Chevron-style deference.”).
Such
interpretations are entitled to deference “only to the extent that
those interpretations have the ‘power to persuade.’”
Merrimon,
758 F.3d at 55 (quoting Christensen, 529 U.S. at 587).
Under this
lower standard of review, known as the Skidmore standard, courts
look to a variety of factors, including the thoroughness of the
agency’s consideration, the validity of its reasoning, and the
consistency
of
its
interpretation
9
with
earlier
and
later
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 10 of 18
pronouncements.
Doe v. Leavitt, 552 F.3d 75, 81 (1st Cir. 2009).
See also Skidmore v. Swift & Co., 323 U.S. 134 (1944).
With respect to IRS revenue procedures, courts generally have
tended to treat them as non-binding and not entitled to Chevron
deference.
See Exxon Mobil Corp. & Affiliated Cos. v. C.I.R., 689
F.3d 191, 200-201 (2d Cir. 2012) (revenue procedure not entitled
to
Chevron
Supply,
or
Inc.
Skidmore
v.
deference);
United
Tualatin
States, 522
F.3d
Valley
937
Builders
(9th
Cir.
2008) (without deciding the issue, applying Skidmore rather than
Chevron standard); Federal Nat. Mortg. Ass’n v. United States, 379
F.3d 1303, 1307-08 (Fed. Cir. 2004) (revenue procedure not entitled
to Chevron deference); Battle Flat, LLC v. United States, 2015 WL
5554807, at *3 (D.S.D. Sept. 21, 2015) (assuming revenue procedures
not entitled to Chevron deference); In re Peterson, 321 B.R. 259,
261 (D. Neb. 2004) (revenue procedure not entitled to Chevron
deference).
Some courts have suggested IRS revenue procedures may
not even be entitled to Skidmore deference.
See Corbalis v.
C.I.R., 142 T.C. 46, 54 (Tax Ct. 2014) (revenue procedure not
entitled to deference); Exxon Mobil Corp. & Affiliated Cos. v.
C.I.R., 689 F.3d 191, 200 (2d Cir. 2012) (revenue procedure
“entitled to little, if any, deference”); Marandola v. United
States,
76
Fed.
Cl.
237,
246
n.14
(Fed.
Cl.
2007)
(revenue
procedures “can, where they set out a persuasive rationale, be
entitled to limited Skidmore deference”).
10
The First Circuit has
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 11 of 18
apparently not yet had occasion to address the issue directly but
it has held in an analogous case that an agency’s interpretative
guidance is not entitled to Chevron deference where the agency
simply co-opts an existing definition designed by a different
agency for use in connection with a different statute. See Navarro
v. Pfizer Corp., 261 F.3d 90 (1st Cir. 2001) (holding in an FMLA
lawsuit that EEOC interpretative guidance issued pursuant to the
ADA was not entitled to Chevron deference when applied in FMLA
context,
particularly
where
EEOC
never
had
any
promulgate regulations pursuant to the FMLA).
authority
to
And perhaps not
surprisingly, the Department of Justice has publicly announced
that it no longer advocates for Chevron deference for revenue
procedures.3
Against this backdrop, I conclude similarly that
Revenue Procedure 99-21 is not binding and is not entitled to
Chevron deference.
That does not end the inquiry, however.
The precedent cited
above suggests that even if not accorded Chevron deference, a
revenue procedure may warrant deference if it survives scrutiny
under the Skidmore standard.
See e.g., Navarro, 261 F.3d at 99
3
Marie Sapirie, DOJ Won’t Argue for Chevron Deference for Revenue Rulings and
Procedures,
Official
Says,
taxanalysts
(May
12,
2011),
http://www.taxhistory.org/www/features.nsf/Articles/2EC3B72AF2B851808525788E0
056818B?OpenDocument (Last visited: Jan. 30, 2017) (“The Department of Justice
will no longer argue for Chevron deference for revenue rulings and revenue
procedures, said Gilbert Rothenberg, appellate section chief in the DOJ's Tax
Division.”).
11
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 12 of 18
(choosing to apply Skidmore standard to agency’s regulation where
Chevron deference not warranted).
As noted, under the Skidmore
standard an agency’s interpretation of its regulations will be
entitled to deference only to the extent those interpretations
have the power to persuade, a determination which turns on a number
of factors such as the “thoroughness evident in the guidance’s
consideration,
the
validity
of
its
reasoning,
consistency with earlier and later pronouncements.”
[and]
its
Navarro, 261
F.3d at 99 (citing Skidmore, 323 U.S. at 140) (internal alteration
marks omitted); Doe v. Leavitt, 552 F.3d 75, 81 (1st Cir. 2009).
This is where the IRS’s reliance on Revenue Procedure 99-21 falls
short.
The purpose of Revenue Procedure 99-21 is to provide guidance
for taxpayers who need to show a disability under section 6511 to
excuse their late filing.
To that extent, Revenue Procedure 99-
21 at its most basic level requires the taxpayer to bring a
doctor’s
note,
an
entirely
reasonable
proposition.
However,
section 6511(h) allows a disability to be based on a showing of a
“mental
impairment”
and
Revenue
Procedure
99-21
directly
undermines that goal where it demands a note from a physician but
then defines that term to exclude a whole class of professionals
generally considered competent to opine on the existence of a
mental impairment.
On the record before the Court, there is no
evidence that the IRS has considered the implications of its
12
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 13 of 18
interpretation of the word “physician” as used in the revenue
procedure.
On the contrary, and as noted, Revenue Procedure 99-
21 was drafted principally by a single IRS employee who without
elaboration or explanation selected a definition of “physician” as
used by the SSA.
is
just
no
In the absence of additional information, there
basis
to
assess
the
soundness
of
the
IRS’s
interpretation of the word “physician” in Revenue Procedure 9921.
Moreover, if the IRS’s goal was to look to the SSA for
instructive
guidance
on
who
may
be
competent
to
opine
on
a
disability based on a physical or mental impairment, then its
interpretation of the word “physician” in Revenue Procedure 99-21
directly contravenes that purpose, because the SSA does permit
psychologists to opine on whether an individual is disabled as a
result of a mental impairment.
(“[m]edical
opinions
are
See 20 CFR § 404.1527(a)(2)
statements
from
physicians
and
psychologists or other acceptable medical sources that reflect
judgments about the nature and severity of your impairment(s)….”)
(emphasis added).
See also Weiler v. Shalala, 922 F.Supp. 689,
696 n.10 (D. Mass. 1996) (“The opinion of a treating psychologist
is considered an acceptable medical source under the treatingphysician rule.”).
Indeed, the SSA and IRS both use definitions
of “disability” that are in relevant part virtually identical.
Compare 42 U.S.C. § 423(d)(1)(A) (“The term “disability” means the
13
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 14 of 18
inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than twelve
months.”)
with
26
U.S.C.
§
6511(h)(2)(A)
(“an
individual
is
financially disabled if such individual is unable to manage his
financial affairs by reason of a medically determinable physical
or mental impairment of the individual which can be expected to
result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months.”) (emphasis added).
So, to the extent the goal underlying Revenue Procedure 99-21 was
to
implement
a
disability-determination
process
based
on
principles consistent with those of the SSA, the interpretation of
“physician” urged by the government here undermines that purpose
where the SSA treats psychologists as physicians and welcomes their
medical opinions in disability determination matters.
To be clear, this is not to suggest that the IRS should have
also incorporated the SSA’s regulation endorsing the acceptance of
medical opinions from psychologists, or defined “physician” more
broadly to encompass and reflect the SSA’s practice.
Rather, the
point is that where the IRS has taken its definition of “physician”
from an agency that demonstrably does not interpret it in practice
to exclude psychologists from opining on a patient’s impairment,
the failure of the IRS to provide any insight explaining the
14
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 15 of 18
deliberative
process
it
went
through
in
implementing
Revenue
Procedure 99-21 gives rise to the concern that the IRS did not
thoroughly consider the implications of interpreting the word
“physician” as it did, or how applying that definition might thwart
a taxpayer’s ability to show a legitimate mental impairment-based
disability, or how, if the IRS did consider such things, why the
policy should nonetheless be enforced.
Perhaps the IRS is in possession of such information.
On the
present record, though, I am not persuaded that the Court should
defer to the defendant’s view that a psychologist’s statement
describing a mental impairment cannot constitute a physician’s
statement within the meaning of Revenue Procedure 99-21.
None of the authority cited by the defendant compels a
different result.
In Abston v. Commissioner, 691 F.3d 992 (8th
Cir. 2012), the court found that the plaintiff failed to satisfy
the requirements of Revenue Procedure 99-21 because she failed to
submit a physician’s statement at all; the court never considered
the issue of whether a statement from a psychologist might also
suffice. Abston, 691 F.3d at 996 (“Because Abston failed to submit
a physician’s statement altogether, we agree with the district
court that she did not provide the IRS with probative evidence of
financial disability.”).
Similarly, all of the cases cited by the
Abston court and relied on by the defendant either explicitly
involve physical impairments –the sort of impairment one might not
15
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 16 of 18
consider a psychologist competent to comment on, or make no mention
of the type of impairment, but none discusses the appropriateness
of
relying
on
a
psychologist’s
statement
Procedure 99-21 or section 6511(h).
to
satisfy
Revenue
The defendant does cite to
one case where the Tax Court observed that a psychologist is not
a
physician
under
Revenue
Procedure
99-21.
Commissioner, 97 T.C.M (CCH) 1542 (2009).
the
IRS
itself
appears
to
have
See
Green
v.
In that case, however,
accepted
and
considered
the
psychologist’s letter opining that the taxpayer suffered from a
mental
impairment,
and
instead
argued
only
that
the
facts
demonstrated that the taxpayer was actually able to handle her
financial affairs and thus was not disabled.
Id.
Regardless, the
Tax Court has also noted that revenue procedures are not entitled
to deference where, as here, “[t]here is no reasoning in support
of the conclusion stated in the revenue procedure.”
Corbalis, 142
T.C. at 54.
In sum, I conclude that the defendant’s interpretation of the
term “physician” in Revenue Procedure 99-21 is not entitled to
deference
here.
psychologist’s
I
conclude
statement
the
further
that
plaintiff
to
the
submitted
extent
supports
the
a
financial disability based on a mental impairment, the IRS was not
required to reject it on the ground that it did not constitute a
“physician’s” statement.
Consequently, I find no basis on this
record to deem the plaintiff’s claim for refund untimely under
16
Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 17 of 18
section 6511(h), and thus do not agree that the Court lacks
jurisdiction to hear the plaintiff’s suit.4
VI.
CONCLUSION
For the foregoing reasons, it is respectfully recommended
that the defendant’s Motion to Dismiss be DENIED.
The parties are
hereby advised that under the provisions of Federal Rule of Civil
Procedure 72(b), any party who objects to this recommendation must
file specific written objections thereto with the Clerk of this
Court within 14 days of the party's receipt of this Report and
Recommendation.
The written objections must specifically identify
the portion of the proposed findings, recommendations, or report
to which objection is made and the basis for such objections.
4
The
The defendant raises two additional points that merit brief attention. First,
the defendant argues that even assuming a psychologist’s statement is
acceptable, the plaintiff’s claim still fails because the plaintiff did not
submit the statement at the same time he submitted the claim for refund, but
instead submitted it with the estate’s initial appeal. I reject this argument,
as have other courts.
Where refund claims may technically be deficient by
virtue of missing some piece of information, the practice is to accept the
missing information at a later stage so it and the taxpayer’s claim may be
considered. See Abston, 691 F.3d at 995 (where claim for refund was denied as
untimely for failure to submit certain information, plaintiff permitted on
appeal to IRS to submit the missing information); see also Walter v. United
States, 2009 WL 5062391, at *10 (W.D.P.A. Dec. 16, 2009) (“No case has ever
held that a treating physician’s statement that contains a technical deficiency
that is easily corrected is insufficient under 6511(h). On the contrary, there
is a doctrine of allowing informal refund claims that are ‘deficient merely in
one or two of the technical requirements imposed by the Treasury regulation.’
”) (quoting Commissioner v. Ewing, 439 F.3d 1015 (9th Cir. 2006)). Finally,
the defendant argues in a closing footnote, and without citation to any
authority, that it is “questionable” whether the psychologist was qualified to
opine that Carlton Stauffer was disabled where the psychologist appears to have
based his determination in part on the taxpayer’s physical ailments, matters
outside a psychologist’s area of expertise.
The sufficiency of the
psychologist’s statement is not before the Court so there is no need to address
this claim. But, even assuming the psychologist may not have been qualified to
assess the significance of Mr. Stauffer’s physical impairments, it does not
mean that his mental impairments were not sufficient on their own to support a
determination of financial disability.
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Case 1:15-cv-10271-MLW Document 28 Filed 02/14/17 Page 18 of 18
parties are further advised that the United States Court of Appeals
for this Circuit has repeatedly indicated that failure to comply
with Rule 72(b) will preclude further appellate review of the
District Court's order based on this Report and Recommendation.
See Keating v. Secretary of Health and Human Servs., 848 F.2d 271
(1st Cir. 1988); United States v. Emiliano Valencia-Copete, 792
F.2d 4 (1st Cir. 1986); Park Motor Mart, Inc. v. Ford Motor Co.,
616 F.2d 603 (1st Cir. 1980); United States v. Vega, 678 F.2d 376,
378-379 (1st Cir. 1982); Scott v. Schweiker, 702 F.2d 13, 14 (1st
Cir. 1983); see also Thomas v. Arn, 474 U.S. 140 (1985).
/s/ Donald L. Cabell
DONALD L. CABELL, U.S.M.J.
DATED:
February 14, 2017
18
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