Three cases being argued at the Federal Circuit in February attracted amicus briefs. One of those cases is Doughtery Electric, Inc. v. United States, a tax case. In it, Dougherty Electric appeals the dismissal by the Court of Federal Claims of a refund suit for lack of subject-matter jurisdiction. This is our argument preview.
In its opening brief, Dougherty Electric argues “most statutory deadlines are non-jurisdictional claim-processing rules” that do not effect the “subject-matter jurisdiction of the federal courts.” That principle, Dougherty Electric contends, applies equally to “statutes governing tax refunds,” particularly where Congress gave no “clear statement” indicating its intent “to divest the federal courts of jurisdiction . . . already bestowed elsewhere.” Dougherty Electric further argues the lower court erred by treating “a collection of equitable bases” designed to excuse “technical deficiencies in taxpayer refund claims” as jurisdictional barriers. Instead, Dougherty Electric argues, if those “doctrines have continuing relevance,” they exist to “require the [Internal Revenue Service] to process refund claims on their merits.”
In its response brief, the government argues the “purported refund claim” was defective for multiple reasons, notably because Dougherty Electric “did not identify the particular year or years for which a refund was sought.” The government further contends the “substantial variance doctrine,” which allows the IRS to consider “a claim for refund, despite failure to timely file a detailed formal claim,” does not apply. According to the government, the doctrine “applies in four limited situations,” none of which apply to Dougherty Electric’s claim. In the government’s view, Supreme Court precedent mandates “failure to file a refund claim with the IRS within the prescribe time deprives the court of jurisdiction over the suit for refund.” The government also maintains that, even if the Federal Circuit does not conclude the lower court does not have jurisdiction based on the claim’s defects, the case should be still be dismissed because the “taxpaxer did not file a timely refund claim,” as required by the Internal Revenue Code.
In its reply brief, Dougherty Electric explains that its initial refund claim was incomplete because Dougherty Electric “could not get all the information” required to “specify the years and quarters involved.” Once that information became available, Dougherty Electric contends, it amended its claim and “the IRS considered and denied the formal claim on its merits.” Dougherty Electric then sought review of that denial by the Court of Federal Claims. Because “it is undisputed” that defects in the initial claim “were fixed by later amendments,” Dougherty Electric maintains the lower court erred in holding that it did not have jurisdiction to review the IRS’s denial of its claim.
The Center for Taxpayer Rights filed an amicus brief in support of Dougherty Electric and reversal. The Center argues the statutory provision requiring “a predicate refund claim” be filed by a taxpayer before bringing suit “is not jurisdictional.” Instead, it says, the statutory provision operates “merely” as a “mandatory claim-processing rule” that functions as a “statutory administrative exhaustion requirement.” The Center contends the Supreme Court has held that mandatory claim-processing rules “are nonjurisdictional and subject to waiver and forfeiture.” Because neither of the two limited exceptions the Court has recognized applies to Dougherty Electric’s claim, the Center concludes, the Federal Circuit’s “precedent that both the claim filing requirement and the deadline are jurisdictional no longer represent good law and must be overruled.”
Oral argument in this case will be heard on Monday, February 2 at 10:00 a.m. in Courtroom 402. We will keep track of the case and report on any developments.