Last Friday, the court heard oral argument in Brown v. United States, a tax case. We have been following it because it attracted an amicus brief. On appeal, the Browns ask the Federal Circuit to overrule the holding of the Court of Federal Claims that it did not have subject matter jurisdiction because the Browns did not attach a power of attorney to amended income tax returns filed by their agent with the Internal Revenue Service. The United States argues “[t]he Browns’ refund claims admittedly violated the taxpayer signature and verification requirements,” and the United States maintains this means “the Browns’ refund claims were not ‘duly filed’ with the IRS before the Browns sued.” The arguments attracted an amicus brief from the Center of Taxpayer Rights in support of the Browns. Judges Lourie, Dyk, and Stoll heard Friday’s argument. This is our argument recap.
Tiffany Hunt argued for the Browns. She contended that the relevant statutory provision requiring a signature on a tax return is subject to waiver. She noted the lower court held that the signature requirement is statutory and not regulatory. But, she argued, because a signature is not expressly required by the relevant statute, any requirement for a signature should be deemed to be a regulatory requirement that may be waived.
Judge Dyk asked what the statute means when it requires tax returns to be “duly filed.” Hunt claimed “duly filed” means that the return followed all statutes and regulations. But that understanding, she added, would allow for Secretary to waive the relevant regulation. Judge Dyk followed up by asking whether there was a waiver here. Hunt noted that this question has not been decided by the lower court because the lower court thought the signature requirement was statutory and therefore that the Browns failed to establish jurisdiction. Hunt urged the panel to remand the case for reconsideration based on waiver.
Judge Stoll asked how the regulatory rule that signatures are presumed to be valid applies to this case. Hunt in response noted that the presumption can be overcome.
Isaac B. Rosenberg argued for the United States. He argued the relevant statute requires citizens to sign their personal income tax returns before those returns can be duly filed. By not following the statute, he maintained, the Browns failed to establish jurisdiction to bring their claim.
Judge Dyk pointed out that “personally” is not in the relevant statutory provision. In response, Rosenberg argued that the statute should be interpreted by considering the entire statutory scheme, and that the overall statutory scheme creates the requirement that individuals include personal signatures on their returns.
Judge Stoll asked, if one must make a return, why they must be the one that signs it, given that the statute just says the return “shall be signed.” In response, Rosenberg argued that the obligation to file is imposed individually on the taxpayer, and so the individual taxpayer must sign the return. He pointed out that a signature is applied under the penalty of perjury and that the self-reporting nature of the tax system requires individuals to take the step of applying their signatures to provide accountability in the process.
Judge Dyk then asked for the government’s position regarding the waiver argument made by the Browns. In response, Rosenberg contended that one of the Browns’ related arguments was not raised at the lower court or in briefs before this court. Rosenberg also argued that there were multiple problems with the return that was filed, and so one cannot assume the IRS was aware of the problem with the signature.
Rosenberg concluded by noting the Browns are not challenging the validity of the statute and the regulation in this case. He maintained the IRS cannot waive the statutory requirements, including a signature requirement. Given the lack of a signature, Rosenberg argued, the statute was violated and the case was properly dismissed by the lower court.
In rebuttal, Hunt argued that the government tried but failed to prove the entire statute requires a personal signature. She maintained that this requirement it is not explicitly written into the statute. And, in the absence of an explicit requirement in the statute, she argued, a personal signature is not required and the Browns should have jurisdiction in the lower court.
We will continue to monitor the case and report on any developments.