Earlier this month, the Federal Circuit heard oral argument in Dixon v. United States, a case that concerns the application of the informal claim doctrine of a tax refund request. Dixon appeals a ruling of the Court of Federal Claims, arguing that the court erred in dismissing his claim based on subject matter jurisdiction or for failure to state a claim for which relief can be granted. Judges Taranto, Clevenger, and Hughes heard the oral argument. This is our argument recap.
Tiffany Hunt argued for Dixon. She began by asserting that the lower court conflated the informal claim doctrine with another doctrine. Additionally, she asserted, the lower court erred by dismissing the tax claim on the basis that the Internal Revenue Service could not waive the signature requirement. Hunt maintained such a waiver was never requested by Dixon.
When the informal claim doctrine is applicable, Hunt suggested that formal compliance with the statute and regulations is excused until a formal claim is filed. Moreover, Hunt argued, the applicability of the informal claim doctrine is dependent on the taxpayer curing the relevant defect by filing a perfected claim for a refund. For purposes of the informal claim doctrine, she argued the informal claim is a timely claim with purely formal defects that fairly apprises the IRS of the bases of the claim within the limitation period.
One of the judges asked whether, assuming an informal claim is sufficient, a taxpayer can correct the claim. The judge asked whether precedent suggests that a taxpayer has to correct the claim while the IRS still has the authority to rule on the claim. Hunt agreed that that is correct.
Prompted by further questions from the panel, Hunt then argued that the IRS had jurisdiction to assess the claim in this case because a first lawsuit was completely and voluntarily dismissed. She argued this, in essence, ripened the claim for this current suit under the informal claim doctrine. Moreover, Hunt asserted, the informal claim doctrine allows a taxpayer more time to perfect a claim.
One of the judges pointed out that the government had not brought up the argument in the lower court that an informal claim is barred because the taxpayer’s cure came too late. The judge indicated he would have been inclined to find that the government had forfeited that point. Hunt highlighted that though forfeiture was not argued in Dixon’s reply brief, that brief did focus on Dixon’s right to cure.
Isaac Rosenberg appeared for the government. Rosenberg argued that the problem in this case for Dixon is that the statute of limitation is firm and cannot be tolled or waived. The relevant statute of limitations, he argued, in this case is the deadline a taxpayer must file a refund request to correct a defect. He asserted Dixon wants the court to treat untimely cured documents as timely under the informal claim doctrine by relating the late documents back to an original, improperly signed claim. This, Rosenberg argued, is incorrect. Once a lawsuit regarding a tax filing is filed in court, he argued, the door is shut to amend or correct that filing. Thus, he argued, the amended documents Dixon submitted after the dismissal of the first lawsuit constitute a new claim and they must satisfy all the requirements of a refund claim on their own. Related to Dixon’s amended submission, however, he argued the statute of limitations had passed.
One of the judges asked what the government’s basis was for treating Dixon’s attempt to submit a cured claim as being an entirely new claim. Rosenberg asserted that the dismissal of the lawsuit regarding the original claim was functionally the same as an IRS rejection. One of the judges, however, pointed out that this was not the argument the government made at the lower court. Rosenberg agreed. However, Rosenberg stated, there is no way around the statute of limitations. Furthermore, Rosenberg argued, the signature and verification requirements were merely regulations at the time of a case relied upon by Dixon, but in 1954 those requirements were included in an enacted statute.
At this point one judge pointed out that much of what is being argued is new on appeal and questioned why the panel should not vacate and remand the case for development of these arguments. Another judge suggested that accepting the government’s argument would result in a large change to existing tax law. Rosenberg responded by arguing that the problem before the court is merely a jurisdictional one. He then provided reasons why the effects of accepting the government’s argument would not be all that great. Lastly, Rosenberg addressed the issue of forfeiture by reasserting why Dixon’s cured claim submission must satisfy all the statutory requirements and arguing that under Supreme Court precedent its untimeliness is a jurisdictional defect.
In rebuttal, Hunt argued the government’s position that the problem with Dixon’s filing is jurisdictional is incorrect. Hunt argued the problem is a mere claim processing issue. Hunt agreed with a judge’s summary of her position that the defective claim was an informal claim and once a defect is found even after the statute of limitations has expired the defect can still be cured. Although the IRS can no longer act, she argued, the informal claim doctrine confers the jurisdiction on to the court to make the assessment of the claim. Hunt argued that, if the correction needed to be made within the statute of limitations, then judicial doctrine would not be needed—she said that is simply called a superseding return, which any taxpayer who makes a mistake on his or her return can file.
We will continue monitoring this case and report on developments.