            In the United States Court of Federal Claims
                                         No. 12-850T

                                   (Filed: November 12, 2013)

**********************************           )
                                             )       Claims for refund of income tax;
TERESA TIERNAN,                              )       application of I.R.C. § 7422(a), the full
                                             )       payment rule, and the “look back”
                      Plaintiff,             )       provisions of I.R.C. § 6511(b); penalties
                                             )       imposed under I.R.C. § 6702
       v.                                    )
                                             )
UNITED STATES,                               )
                                             )
                      Defendant.             )
                                             )
**********************************


       Teresa Tiernan, pro se, Centredale, Rhode Island.

       Karen Servidea, Court of Federal Claims Section, Tax Division, United States
Department of Justice, Washington, D.C., for defendant. With her on the briefs were Kathryn
Keneally, Assistant Attorney General, David I. Pincus, Chief, and G. Robson Stewart, Assistant
Chief, Court of Federal Claims Section, Tax Division, United States Department of Justice,
Washington, D.C.


                                    OPINION AND ORDER
LETTOW, Judge.

        In this tax case, plaintiff, Teresa Tiernan, requests a refund of income taxes that were
collected by levy against her assets, including her house, as well as damages for the allegedly
wrongful imposition of liens and levies instituted against her. 1 Pending before the court is the
government’s motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1)
of the Rules of the Court of Federal Claims (“RCFC”) or, alternatively, for failure to state a
claim upon which relief can be granted pursuant to RCFC 12(b)(6).
       1
         Ms. Tiernan did not specify the years for which she is requesting refunds. Both
Ms. Tiernan and the government have provided information regarding Ms. Tiernan’s income in
2002 through 2011, but the government avers that no tax assessments have been made for tax
years 2010 and 2011. See Def.’s Mot. to Dismiss (“Def.’s Mot.”) at 2 n.1, ECF No. 6. In their
briefing, the parties have indicated that tax years 2002 through 2009 are the years for which
refunds have been claimed. Therefore, the court will treat the complaint as addressing tax years
2002 through 2009.
                                        BACKGROUND

         Ms. Tiernan did not timely submit an income tax return for a number of the pertinent tax
years, and the Internal Revenue Service (“IRS”) for those years prepared substitute tax returns
for her. Based upon the IRS’s Certificates of Assessments and Payments and administrative
files, the following charts describe Ms. Tiernan’s tax and penalty activity for the relevant tax
years. The first chart shows the dates (1) of the IRS’s completion of substitute returns, (2) of
Ms. Tiernan’s submission of returns or amended returns, (3) of the full payment, if applicable, of
tax liability, and (4) of the most recent part payment if Ms. Tiernan has not fully paid the
resulting tax liability:

Tax Year Date IRS completed           Date Ms. Tiernan            Date of full    Date of last
         substitute returns 2         filed return(s) 3           payment         part payment

2002          1/28/2005               None                        12/14/2010            —

2003 4       1/28/2005                9/11/2009, 11/23/2010 5     12/13/2011             —

2004           —                     11/25/2008, 11/28/2010            —           12/10/2012

2005         6/27/2007               11/23/2010                    9/11/2012           —

2006         2/27/2008               2/3/2011                          —           9/11/2012

2007         10/21/2009             11/28/2010                         —               —

2008         9/30/2010              11/13/2010                         —          10/15/2012

2009           —                     2/2/2011                          —           4/15/2010



         2
         The substitute returns were prepared by the IRS pursuant to 26 U.S.C. (“I.R.C.”)
§ 6020(b) and were not signed by Ms. Tiernan in accord with I.R.C. § 6020(a). In those
circumstances, the taxpayer is still obliged to file a return, see Healer v. Commissioner, 115 T.C.
316, 322-23 (2000), and a failure to do so means that no return will have been filed for purposes
of I.R.C. § 6511. Id. (citing Flagg v. Commissioner, 73 T.C.M. (CCH) 3216, 1997 WL 357856
(1997)).
         3
      The dates in this column reflect the dates of submission by Ms. Tiernan of returns and
amended returns.
         4
        In 2003, the IRS granted Ms. Tiernan a four month extension to file a return. See Def.’s
Mot. at 4 & Ex. 1, App. B at B-10.
         5
        Ms. Tiernan made a part payment on April 15, 2004, before filing either her initial return
or her amended return. See Def.’s Mot. at 5 & Ex. 2, App. B at B-11 to B-13.


                                                  2
See Def.’s Mot. at 4-8 & App. B, Ex. 1-8.

       Shown in the following chart is a summary of penalties imposed by the IRS, the date
each penalty was imposed, the authority cited for imposing the penalties, and the amount of each
penalty:

Year Penalty Type                      Date Imposed           Authority Cited         Amount

2002   Filing Frivolous Return         11/23/2009             I.R.C. § 6702           5,000

2003   Filing Frivolous Return         2/8/2010               I.R.C. § 6702           5,000

2005   Filing Frivolous Return         3/29/2010              I.R.C. § 6702           5,000

2007   Filing Frivolous Return         1/4/2010               I.R.C. § 6702           5,000

2007   Filing Frivolous Return         10/18/2010             I.R.C. § 6702           5,000

2007   Filing Frivolous Return         8/1/2011               I.R.C. § 6702           5,000

See Def.’s Mot. at 4-8 & App. B, Ex. 11-14. Ms. Tiernan has made no payments toward any of
the penalties except for part of the penalty assessed in 2009, for the 2002 tax year, amounting to
$1,265.42. Id., App. B at B-62.

                                 STANDARDS FOR DECISION

        This court derives its jurisdiction over federal tax refund cases from the Tucker Act, 28
U.S.C. § 1491(a)(1). See Ledford v. United States, 297 F.3d 1378, 1382 (Fed. Cir. 2002); Heger
v. United States, 103 Fed. Cl. 261, 263 (2012). In such cases, the plaintiff bears the burden to
prove that each claim falls within this jurisdictional grant. See Barrett v. Nicolson, 466 F.3d
1038, 1041 (Fed. Cir. 2006) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178,
188-89 (1936)). When deciding a motion to dismiss, the court will construe all unchallenged
allegations in the complaint in favor of the pleader, but disputed jurisdictional facts must be
proved by a preponderance of the evidence. See Hamlet v. United States, 873 F.2d 1414, 1416
(Fed. Cir. 1989) (citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)); see also Nez Perce Tribe
v. United States, 83 Fed. Cl. 186, 188 (2008). In this instance, the court will construe
Ms. Tiernan’s pro se pleadings liberally, but this leniency cannot relieve the plaintiff of her
burden to prove jurisdiction. See Heger, 103 Fed. Cl. at 263 (citing Jackson v. United States,
100 Fed. Cl. 34, 39 (2011)). Ms. Tiernan’s complaint engenders three jurisdictional questions.

        First, jurisdiction in this court is subject to the requirements set out at I.R.C. § 7422(a).
See United States v. Clintwood Elkhorn Min. Co., 553 U.S. 1, 7-8 (2008); Diamond v. United
States, 107 Fed. Cl. 702, 705 (2012), aff’d, __ Fed. Appx. __, 2013 WL 5096287 (Fed. Cir. Sep.
12, 2013); Dumont v. United States, 85 Fed. Cl. 425, 427-28 (2009), aff’d, 345 Fed. Appx. 586
(Fed. Cir. 2009). Under Section 7422,




                                                   3
       [n]o suit or proceeding shall be maintained in any court for the recovery
       of any internal revenue tax alleged to have been erroneously or illegally
       assessed or collected, or of any penalty claimed to have been collected
       without authority, or of any sum alleged to have been excessive or in any
       manner wrongfully collected, until a claim for refund or credit has been
       duly filed with the Secretary, according to the provisions of law in that
       regard, and the regulations of the Secretary established in pursuance thereof.

26 U.S.C. § 7422(a). Consequently, Ms. Tiernan, in seeking to establish subject matter
jurisdiction in this court for a tax refund claim, must demonstrate that she has first filed her claim
with the Secretary of the Treasury as required by Section 7422. Clintwood Elkhorn, 553 U.S. at
7-8; Diamond, 107 Fed. Cl. at 705.

        Second, Ms. Tiernan must demonstrate compliance with the “full payment rule,” i.e., to
seek a refund she must first have fully paid the pertinent tax liability. Shore v. United States, 9
F.3d 1524, 1526 (Fed. Cir. 1993) (citing Flora v. United States, 362 U.S. 145, 150 (1960)); see
also Brach v. United States, 98 Fed. Cl. 60, 65-66 (2011), aff’d on other grounds, 443 Fed.
Appx. 543 (Fed. Cir. 2011).

          Finally, the court’s jurisdiction over tax refund claims is subject to the statute of
limitations expressed in I.R.C. § 6511. Section 6511(a) requires that a refund claim must “be
filed . . . 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.” I.R.C. § 6511(a); see Dumont, 85 Fed. Cl. at
428. Under the relevant Treasury regulations, the filing of a tax return seeking a refund
“constitute[s] a claim for refund or credit . . . for the amount of the overpayment disclosed by
such return.” 26 C.F.R. § 301.6402-3(a)(5).

                                            ANALYSIS

                                          I. Income Tax

                                          A. Section 7422

         Ms. Tiernan has never filed a tax return for the tax year 2002, nor has she filed any other
documentation which could be construed as a claim for a tax refund for this particular year. The
government asserts that Ms. Tiernan has not established jurisdiction over any claims for a tax
refund for that year because she has not complied with the requirements of Section 7422 by
filing a claim with the IRS. Def.’s Reply to Pl.’s Resp. to Mot. to Dismiss (“Def.’s Reply”) at 3.
That contention is well taken. Ms. Tiernan has failed to establish that the court has jurisdiction
over her claim for the tax year 2002.

        The “variance doctrine” is a corollary derived from Section 7422 that “bars a taxpayer
from presenting claims in a tax refund suit that ‘substantially vary’ the legal theories and factual
bases set forth in the tax refund claim presented to the I.R.S.” Lockheed Martin Corp. v. United
States, 210 F.3d 1366, 1371 (Fed. Cir. 2000) (citing Cook v. United States, 599 F.2d 400, 406
(Cl. Ct. 1979)); see also Heger, 103 Fed. Cl. at 263-64. A Treasury Regulation requires a



                                                  4
taxpayer who seeks a refund to “set forth in detail each ground upon which a . . . refund is
claimed and facts sufficient to apprise the [IRS] of the exact basis thereof.” 26 C.F.R.
§ 301.6402-2(b)(1). In essence, Ms. Tiernan cannot present theories or factual bases for refund
claims in this court that have not previously been presented to the IRS. Ms. Tiernan alleges that
she is not subject to federal tax laws because she is not a citizen of the United States but rather is
an “American National.” Compl. at 1. 6 This contention does not appear in any of her tax return
filings. See Def.’s Reply, Ex. A. Consequently, the court finds, as an alternative ground for
dismissal of all of Ms. Tiernan’s claims, that she has presented her claims for refund in this court
on a ground that varies from those in the returns she filed, and therefore the court cannot exercise
jurisdiction over any of her claims.

                                    B. Full Payment Rule

        The government argues that the court cannot exercise jurisdiction over Ms. Tiernan’s tax
refund claims for the tax years 2004, 2006, 2007, 2008, and 2009 because the tax liability for
those years has not been paid in full. Def.’s Mot. at 13-14. Ms. Tiernan does not contest this
point, and the tax records provided to the court for those years show balances that have not been
paid. The court accordingly concurs that subject matter jurisdiction for Ms. Tiernan’s refund
claims has not been established for tax years 2004, 2006, 2007, 2008, and 2009.

                     C. The “Look Back” Provisions of Section 6511(b)

       For the 2003 and 2005 tax years, Ms. Tiernan has fully paid her tax liability. The
government argues that her claims for these tax years should be dismissed for failure to state a
claim because her recovery would be limited to $0 under the “look back” provisions of Section
6511(b). Def.’s Mot. at 14; Def.’s Reply at 6. 7 Section 6511(b) contains two look-back
provisions which limit recovery of a refund. If a claim is filed within three years of the tax

       6
         Ms. Tiernan contends that federal income taxes may lawfully be imposed only on
persons who are citizens of the District of Columbia and other federal enclaves. Because she
was born in Rhode Island, Ms. Tiernan is a citizen of the United States as well as Rhode Island.
See U.S. Const., amend. XIV, § 1 (“All persons born or naturalized in the United States and
subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they
reside.”). The Internal Revenue Code “imposes an income tax on the income of every individual
who is a citizen or resident of the United States.” 26 C.F.R. § 1.1-1(a)(1). Ms. Tiernan’s
argument, therefore, is frivolous. See United States v. Cooper, 170 F.3d 691, 691-92 (7th Cir.
1999) (ordering an appellant to show cause why he should not be sanctioned for making the
frivolous argument that only residents of the District of Columbia and other federal enclaves are
subject to federal tax laws); United States v. Mundt, 29 F.3d 233, 237 (6th Cir. 1994) (rejecting
as frivolous a defendant’s argument that he was not subject to federal income taxes because he
was solely a resident of the State of Michigan and not a resident of any “federal zone.”).
       7
         The government also argues that the 2003 and 2005 amended returns are not proper
claims for refund because they fail to state an overpayment as required by 26 C.F.R. § 301.6402-
3(a)(5). See Def.’s Reply at 6. This issue was not fully addressed by the parties, and the court
consequently declines to consider it.


                                                  5
return, then the taxpayer is limited to the portion of taxes paid during the three-year period
immediately preceding the filing of the claim. I.R.C. § 6511(b)(2)(A). If the refund claim is not
filed within three years from the time a return was filed, then the amount of the credit or refund
is limited to “the portion of the tax paid during the 2 years immediately preceding the filing of
the claim.” I.R.C. § 6511(b)(2)(B). Where a taxpayer pays part of the tax before, and part after,
filing a refund claim, the amount of any refund potentially allowable is limited to the amount
paid before the claim (and within the applicable two- or three-year look-back period). See
Carroll v. United States, 198 F. Supp. 2d 328, 348 (E.D.N.Y. 2001), rev’d on other grounds, 339
F.3d 61 (2d Cir. 2003); Keeter v. United States, 957 F. Supp. 1160, 1163-64 (E.D. Cal. 1997)
(holding that a refund may include additional taxes paid after the filing of a refund claim, so long
as the total does not exceed the portion of tax paid prior to the administrative claim). The
amount paid after the refund claim arguably constitutes a request for abatement rather than
refund. See Carroll, 198 F. Supp. 2d at 346-47 (discussing, inter alia, Import Wholesalers Corp.
v. United States, 368 F.2d 577, 578-80 (Ct. Cl. 1966) (finding waiver of the prior-claim rule
where taxpayer, in requesting abatement, set forth the necessary elements for a refund, and an
IRS District Director responded to that request with a “claim for refund” form letter)). If the
look-back provisions result in no recovery to the taxpayer, the court treats such a result as a
failure to state a claim upon which relief can be granted. See Boeri v. United States, 724 F.3d
1367, 1369 (Fed. Cir. 2013); Murdock v. United States, 103 Fed. Cl. 389, 393 (2012).

         For the 2003 tax year, plaintiff was given a four month extension in which to file a return.
Therefore, the “look back” time limit for 2003 should be three years plus four months. See
I.R.C. § 6511(b)(2)(A) (referring to “the portion of the tax paid within the period, immediately
preceding the filing of the claim, equal to 3 years plus the period of any extension of time for
filing the return.”). She made a single payment on April 15, 2004 toward her tax liability for
2003 and filed her return on September 11, 2009 and her amended return on November 23, 2010.
Thus, recovery is barred for any payment made before May 11, 2006. Because her single
payment was made before the “look back” limit for either filing date, recovery would be
constrained to $0 for 2003. The amounts collected after the amended returns were filed would
be subject to abatement requests, not refund claims. 8 As for the 2005 tax year, plaintiff made no
payment toward that year’s tax liability before she filed her amended return. 9 The amounts
collected afterward would be subject only to abatement requests. Therefore, any refund recovery
for 2005 would also be limited to $0. As a result, plaintiff has failed to state a claim upon which
relief can be granted, and her claims for the 2003 and 2005 tax years are dismissed under RCFC
12(b)(6).

                                         II. Penalties

        Ms. Tiernan also challenges the penalties assessed against her by the IRS. See Compl. at
3 (seeking return of “all monies”). The IRS assessed penalties against Ms. Tiernan for filing

       8
       Ordinarily, taxpayers avoid this result by filing fresh refund requests after additional
payments have been made.
       9
       The amended return for 2005 was filed on November 23, 2010. Her first payment of tax
was on August 16, 2011. See Def.’s Mot. Ex. 2, App. B at B-26.


                                                 6
frivolous returns under the authority of I.R.C. § 6702. Generally, a taxpayer must pay the
penalty in full before challenging the penalty in court. See Schlabach v. United States, 101 Fed.
Cl. 678, 681-82 (2011) (discussing frivolous return penalties); Humphrey v. United States, 854 F.
Supp. 2d 1301, 1303-04 (N.D. Ga. 2011); see also 26 U.S.C. § 6532(a); Flora, 362 U.S. at 155.
Because Ms. Tiernan did not pay any of her penalties in full, the court cannot exercise subject
matter jurisdiction over her claims for a refund regarding the penalties. 10

               III. Alleged Injuries from IRS’s Tax Collection Activities

        The complaint also alleges that Ms. Tiernan sustained injuries based on the IRS’s actions
regarding “liens and levies,” specifically a levy against her house. Compl. at 3. The government
avers that the court lacks subject matter jurisdiction over these claims because they are reserved
for the federal district courts. Def.’s Mot. at 8-9; Def.’s Reply at 8. Section 7433 of the Internal
Revenue Code states in pertinent part:

       If, in connection with any collection of [f]ederal tax with respect to a
       taxpayer, any officer or employee of the Internal Revenue Service
       recklessly or intentionally, or by reason of negligence, disregards any
       provision of this title, or, any regulation promulgated under this title,
       such taxpayer may bring a civil action for damages against the United
       States in a district court of the United States.

I.R.C. § 7433(a). This specific grant of jurisdiction to district courts to hear damage claims
arising out of the IRS’s collection activities obviates any possible jurisdiction this court might
otherwise have. See Montagne v. United States, 90 Fed. Cl. 41, 48 (2009); Dumont, 85 Fed. Cl.
at 430. 11

                                         CONCLUSION

        For the reasons stated, the government’s motion to dismiss is GRANTED. The clerk
shall enter judgment in accord with this decision.

       No costs.



       10
         I.R.C. § 6703(c)(1) provides an alternative to the full payment requirement, allowing a
taxpayer to pay 15% of the penalty and file for a refund within 30 days of receiving notice of the
penalty. See I.R.C. § 6703(c)(1); see also Humphrey, 854 F. Supp. 2d at 1304. Ms. Tiernan
does not satisfy this exception. Although she made a payment of more than 15% of the penalty
assessed for 2002, she did not file for a refund of the penalty within the required deadline of 30
days from that payment.
       11
         The government also contends that damage claims arising from collection activities
“sound in tort” and therefore are excluded from this court’s jurisdictional grant under the Tucker
Act. Def.’s Mot. at 9-10; Def.’s Reply at 8.



                                                 7
It is so ORDERED.



                        Charles F. Lettow
                        Judge




                    8
