Earlier this month, the Federal Circuit issued its opinion in Dixon v. United States, a tax case that attracted an amicus brief. In this case, the Federal circuit reviewed a judgment of the Court of Federal Claims dismissing Dixon’s claim for lack of subject-matter jurisdiction and, in the alternative, for failure to state a claim upon which relief could be granted. In an opinion authored by Judge Taranto and joined by Judges Clevenger and Hughes, the Federal Circuit affirmed the judgment of the Court of Federal Claims. This is our opinion summary.

Judge Taranto presented the facts of the case:

Alan C. Dixon seeks a refund of taxes he paid to the Internal Revenue Service (IRS). In 2017, his tax preparer filed amended tax returns for him, within the time permitted by law, claiming a refund of amounts paid for tax years 2013 and 2014, but, after an audit, the IRS denied the refund claims and instead assessed additional taxes. Mr. Dixon then filed an action in the U.S. Court of Federal Claims (Claims Court), and during that litigation, it became clear that Mr. Dixon had not personally written the signatures of his name on the 2017 amended returns—the tax preparer had signed Mr. Dixon’s name—and no authorizing power-of-attorney documentation accompanied the amended returns. Because 26 U.S.C. § 7422(a) prevents a taxpayer from filing suit to claim a refund without having earlier submitted a “duly filed” refund claim to the IRS, and the 2017 amended returns were for the above reason not “duly filed,” the Claims Court dismissed the case in February 2020.

Within days of that dismissal, Mr. Dixon filed with the IRS duly signed amended returns for the 2013 and 2014 tax years, though the time allowed for amended returns claiming a refund for 2013 and 2014 had long passed. He shortly proceeded to file a timely appeal of the dismissal to this court, but after briefing, he voluntarily dropped the appeal in September 2020. Then, only days later, he filed a second action in the Claims Court based on the IRS’s failure to act on his duly signed 2020 amended returns. The Claims Court again dismissed Mr. Dixon’s case, concluding that the 2020 amended returns were untimely and that the “informal claim” doctrine was inapplicable here to allow the untimely (but proper) 2020 filings to relate back in time to the timely (but defective) 2017 filings.

After presenting this procedural background, Judge Taranto described the relevant law regarding tax refunds. For example, he noted how, “[i]f a taxpayer has filed a return . . . and paid taxes based on the return, and it later turns out that the amount paid was more than owed, then . . . the IRS . . . ‘within the applicable period of limitations, may credit the amount of such overpayment’ against other tax liabilities of the taxpayer ‘and shall . . . refund any balance to such person.’” He further described how a “[c]laim for credit or 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.’” He noted how a “failure to timely file a refund claim forecloses recovery.”

Judge Taranto then described the “timing and other requirements for filing refund claims in court” as opposed to with the Internal Revenue Service:

Section 6532(a) states two rules for the timing of the action in court. First, no such suit “shall be begun before the expiration of 6 months from the date of filing the claim required under such section unless the Secretary renders a decision thereon within that time.” . . . Second, “nor [shall such suit be begun] after the expiration of 2 years from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance of the part of the claim to which the suit or proceeding relates.” . . . The latter limit may be extended by written agreement with the Secretary.

Judge Taranto then noted how 26 U.S.C. § 7422(a) states that “'[n]o suit or proceeding shall be maintained in any court for the recovery of’ a tax refund ‘until a claim for refund . . . has been duly filed with the Secretary.’” He highlighted two statutes related to determining whether claims are “duly filed”:

Section 6061(a) says: “Except as otherwise provided . . . , any return, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall be signed in accordance with forms or regulations prescribed by the Secretary.” Section 6065 says: “Except as otherwise provided by the Secretary, any return, declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall contain or be verified by a written declaration that it is made under the penalties of perjury.”

Importantly, Judge Taranto highlighted a previous case ruling that “a taxpayer must satisfy the statutory default rule or else comply strictly with the implementing regulations.” And, significantly, he noted how, “if they do neither, the document is effectively unsigned and unverified . . . and the taxpayer has not ‘duly filed’ the refund claim.” And, he noted, “the Supreme Court has ruled that failure to file with the IRS within the prescribed time deprives the court of ‘jurisdiction over [the] suit for refund.’”

Judge Taranto conceded that, in some circumstances, “a taxpayer’s claim’ may or even must be addressed by the IRS or heard in court ‘even though the taxpayer did not timely file the formal, detailed claim required by the regulations.’” He described how the “‘substantial variance doctrine’ . . . ‘permits consideration of a claim for refund despite failure to timely file detailed formal claims with the IRS when a substantial variance from the requirements of the regulation is not involved.’” But, he mentioned, “’this doctrine applies only in four limited situations’ and . . . each has ‘come to be identified as a separate doctrine.’” One of these doctrines, he explained, is the “informal-claim doctrine.” He noted how, “[u]nder the informal-claim doctrine, courts treat ‘a timely claim with purely formal defects [as] permissible if it fairly apprises the IRS of the basis for the claim within the limitations period’ and is followed by ‘an untimely amendment that complied with the regulations.’” He further noted that, “where the doctrine applies, an untimely formal claim is allowed to relate back . . . to a timely informal claim.”

Judge Taranto then discussed two instances where “[a]n amendment, . . . correcting defects in an earlier claim, may be untimely.” The first way, he noted, is “once the IRS has allowed or disallowed the refund claim.” The second way, he continued, is “after filing a suit for refund, because that act causes authority over the refund claim to transfer from the IRS to the Department of Justice.” He remarked that, “[i]n either case, the ‘IRS’s jurisdiction’ is ‘terminate[d],’ and the ‘amendment is ineffective.’” Among other things, he noted how “the Claims Court’s view, which would categorically limit the informal-claim doctrine to claims that are accompanied by a written declaration made under penalty of perjury, is inconsistent with a substantial body of case law.”

Judge Taranto then noted how the government principally argued that “at least the signature requirement . . . is statutory and that the informal-claim doctrine applies only when the sole defects of the informal claim are ones of regulatory compliance, not statutory compliance.” The court did not accept or reject this argument. Rather, the court “affirm[ed] the Claims Court’s decision on a separate ground advanced by the government” that “Mr. Dixon’s ‘amendment[s],’ . . . were ‘too late’ when filed . . . because of his initial Claims Court action.” The court rejected Dixon’s “argument that the [too late] principle is inapplicable to the informal-claim doctrine.” In short, the Federal Circuit held that, “the doctrine [of informal-claims] does not apply here” and that the “‘too late’ principle [does apply] here.”

As a result of this analysis, the Court affirmed the dismissal of the refund action for lack of jurisdiction.