United States District Court, D. Utah Central Division
JAMES S. TANNE & MEGAN M. TANNE, Plaintiffs,
COMMISSIONER OF INTERNAL REVENUE SERVICE, Defendant.
Judge Robert J. Shelby Magistrate Judge Evelyn J. Furse
REPORT AND RECOMMENDATION TO DENY MOTION TO ADD
SUPPLEMENTAL CLAIM (ECF NO. 63)
J. FURSE United States Magistrate Judge.
Plaintiffs James Tanne and Megan Tanne move the
Court for “leave to supplement their
pleadings with a Supplemental Claim for 2012 Offsets for
2005.” (Am. Request for Leave to Submit Suppl. Claim
(“Mot.”) 1, ECF No. 63.) Specifically, Mr. and
Ms. Tanne's supplemental claim contests the penalty
amount and interest the IRS applied in 2013 and 2014 from a
2012 overpayment to tax owed by Mr. and Ms. Tanne from their
2005 tax return. (Suppl. Claim for 2012 offsets for 2005
(“Suppl. Claim”), ¶¶ 4-5, 12, ECF No.
63-1.) The undersigned RECOMMENDS the District Court deny Mr.
and Ms. Tanne's Motion because it lacks jurisdiction over
the supplemental claim, and alternatively res judicata bars
the supplemental claim.
April 20, 2015, Mr. and Ms. Tanne filed a Complaint against
the Commissioner of Internal Revenue Service seeking refunds
for the 2004 and 2005 tax years. (ECF No. 3.) On July 12,
2016, the Tannes filed a Request for Leave to Submit
Supplemental Claim. (ECF No. 47.) After dismissal of their
Complaint, (ECF No. 55), and denial of their initial request
for failure to meet local rules, (ECF No. 61), Mr. and Ms.
Tanne filed a Motion for Leave to File a Supplemental Claim.
(Am. Request for Leave to Submit Suppl. Claim
(“Mot.”), ECF No. 63.)
Federal Rule of Civil Procedure (“Rule”)
15(a)(2), a court shall freely grant leave to amend when
justice requires. Fed.R.Civ.P. 15(a)(2). Courts
“generally refuse leave to amend only on ‘a
showing of undue delay, undue prejudice to the opposing
party, bad faith or dilatory motive, failure to cure
deficiencies by amendments previously allowed, or futility of
amendment.'” Duncan v. Manager, 397 F.3d
1300, 1315 (10th Cir. 2005) (quoting Frank v. U.S. West,
Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)). ”A
proposed amendment is futile if the complaint, as amended,
would be subject to dismissal.” Watson ex rel.
Watson v. Beckel, 242 F.3d 1237, 1239-40 (10th Cir.
Ms. Tanne argue this Court should grant their Motion because
“[t]he cause of action arose after Petitioners
filed the initial claim, ” and “the new
supplemental claim stands on its own, demanding repayment of
separate funds which were garnished from overpaid taxes in
the 2012 tax year for offsets in the 2005 tax year.”
(Mot. 1-2, ECF No. 63.) The United States argues the Court
should deny Mr. and Ms. Tanne's Motion because the
supplemental claim “is futile and would be subject to
dismissal for failure to state a claim under Fed.R.Civ.P.
12(b)(6) and for lack of subject matter under Fed.R.Civ.P.
12(b)(1).” (United States' Mem. in Opp'n to
Pls.' Am. Request for Leave to Suppl. Proceedings,
(“Opp'n”), 2, ECF No. 64.)
the United States contends the Court should deny the
supplemental claim because (1) the claim is time barred under
26 U.S.C. § 6511, (2) the attempt to have 2004 funds
applied to 2005 is time barred, and (3) the Court lacks
subject matter jurisdiction over the claim under 26 U.S.C.
§ 6512. (Id. at 7-9.) The Court considers the
subject matter jurisdiction argument first, as it must.
See Sinochem Int'l Co. v. Malay Int'l
Shipping Corp., 549 U.S. 422, 430-31 (2007).
The Court Lacks Jurisdiction Over Mr. and Ms. Tanne's
Proposed Supplemental Claim.
United States argues this Court should deny Mr. and Ms.
Tanne's Supplemental Claim as futile because the Court
lacks subject matter jurisdiction. Specifically, the United
States argues “this Court lacks jurisdiction over the
proposed supplemental claim for 2005 pursuant to 26 U.S.C.
§ 6512(a) because the Plaintiffs already challenged the
2005 tax year deficiency before the Tax Court.”
(Opp'n 9, ECF No. 64.)
U.S.C. § 6512(a) provides that “if the taxpayer
files a petition with the Tax Court . . . no credit or refund
of income tax for the same taxable year . . . in respect of
which the secretary has determined the deficiency shall be
allowed or made and no suit by the taxpayer for the recovery
of any part of the tax shall be instituted in any
court.” 26 U.S.C. § 6512(a).
Section 6512(a) is an exception to the general rule that the
United States may not be sued in its own courts. The
exception provided by section 6512(a) is a limited one and
generally prohibits a taxpayer from instituting an action
against the government once he has petitioned to the Tax
Court. . . . [S]ection 6512(c) serves to “deprive the
district court of jurisdiction” once the Tax Court has
been petitioned. . . . The jurisdictional bar of section
6512(a) operates to prohibit any action for taxes for that
Solitron Devices, Inc. v. United States, 862 F.2d
846, 848 (11th Cir. 1989) (citing United States v.
Alabama, 313 U.S. 274 (1941), Holzer v. United
States, 250 F.Supp. 875, 877 (E.D. Wisc.), aff'd,
367 F.2d 822 (7th Cir. 1966); quoting 1st Nat'l Bank
of Chicago v. United States, 792 F.2d 954, 956 (9th
Cir.1986)). Courts consider penalties and interest as part of
the “tax” contemplated by § 6512.
See, e.g., Cheesecake Factory Inc. v.
United States, 111 Fed.Cl. 686, 696 (Fed. Cl. 2013).
Ms. Tanne contend that “Defendant's assertions of
26 U.S.C. § 6512 relative to tax year 2005 are not
relevant because the Supplemental Claim does not
attach to the $1, 080 assessment of the 2005 tax against
taxpayers' income - there is no dispute over this amount,
nor was there ever.” (Reply 10, ECF No. 65.) Mr. and
Ms. Tanne dispute only the amount of the penalty and interest
assessed on the $1, 080.00 deficiency. Specifically, Mr. and
Ms. Tanne claim that “there should be no interest
accrued nor penalties assessed” because they overpaid
their 2004 taxes, and therefore ...