       In the United States Court of Federal Claims
                                          No. 12-432 T

                             (E-Filed: July 3, 2013)
________________________________________
                                               )
THE CHEESECAKE FACTORY INC.,                   )
                                               ) Granting Motion to Dismiss for
                  Plaintiff,                   ) Lack of Jurisdiction; Claim for
                                               ) Refund for Tax Year as to Which
v.                                             ) Plaintiff Received a Notice of
                                               ) Deficiency and Filed a Petition in
THE UNITED STATES OF AMERICA,                  ) the Tax Court; I.R.C. § 6512(a)
                                               )
                  Defendant.                   )
________________________________________ )

L. Richard Walton, Marina del Rey, CA, for plaintiff.

Carl D. Wasserman, Attorney, with whom were Kathryn Keneally, Assistant Attorney
General, and David I. Pincus, Chief, Court of Federal Claims Section, Tax Division,
United States Department of Justice, Washington, DC, for defendant.

                                           OPINION

HEWITT, Chief Judge

       The Cheesecake Factory, Inc. (plaintiff) brings this suit seeking a refund of
penalties and interest paid to the Internal Revenue Service (IRS) for its 2005 tax year in
the amount of $432,280 (plus interest). See Compl. for Refund of Income Taxes
(Complaint or Compl.), Docket Number (Dkt. No.) 1, ¶ 1; id. at 11.1 Plaintiff asserts that
       1
          The Cheesecake Factory, Inc. (plaintiff) filed its Complaint for Refund of Income Taxes
(Complaint or Compl.), Docket Number (Dkt. No.) 1, on July 2, 2012. The Complaint consists
of twelve pages: pages one through eleven contain numbered paragraphs, which the court cites
by paragraph number, and pages eleven and twelve contain a “Prayer” for relief, which the court
cites by page number.

        With the Complaint, plaintiff also filed four exhibits, see Compl. Exs. A-D, Dkt. No. 1, at
14-32, see also Compl. ¶¶ 8, 15, 18, 20-21 (referring to the exhibits by letter), which the court
cites by the page numbers assigned by the court’s Case Management/Electronic Case Files
(CM/ECF) system, appearing in the top right corner of each page.
it overpaid penalties and interest for its 2005 tax year because the United States
(defendant or the government), acting through the IRS, “fail[ed] to properly credit prior
year overpayments [to plaintiff’s 2005 tax year].” See id. ¶ 1. The government has filed
a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the
Rules of the United States Court of Federal Claims (RCFC) and for failure to state a
claim upon which relief can be granted pursuant to Rule 12(b)(6) of the RCFC. See The
United States’ Mot. to Dismiss Pl.’s Compl. Pursuant to RCFC 12(b)(1) & 12(b)(6)
(defendant’s Motion or Def.’s Mot.), Dkt. No. 13, at 1.2 The government argues that the
court lacks jurisdiction “because plaintiff previously petitioned the United States Tax
Court [(Tax Court)] for a determination of its tax liability for the 2005 tax[] year,” id.
(citing 26 U.S.C. (I.R.C.) § 6512(a) (2006) (limiting a taxpayer’s ability to bring a suit
for a refund or credit of income tax for a taxable year with respect to which the taxpayer
has filed a petition in the Tax Court in response to a notice of deficiency)), and that
plaintiff has failed to state claim upon which relief can be granted because, “as a result of
the Tax Court’s adjudication of that petition, this suit is also barred by principles of res
judicata,” see id.

        Now before the court are: plaintiff’s Complaint, filed July 2, 2012; defendant’s
Motion, filed December 5, 2012; Plaintiff’s Opposition to Defendant’s Motion to Dismiss
Pursuant to RCFC 12(b)(1) and 12(b)(6) (plaintiff’s Response or Pl.’s Resp.), Dkt. No.
24, filed March 1, 2013; and The United States’ Reply to Plaintiff’s Opposition to the
United States’ Motion to Dismiss, Dkt. No. 29 (defendant’s Reply or Def.’s Reply), filed
April 29, 2013.

        For the following reasons, defendant’s Motion, to the extent that it seeks dismissal
for lack of jurisdiction, is GRANTED and, to the extent that it seeks dismissal for failure
to state a claim upon which relief can be granted, is DENIED as MOOT.


       2
          The United States (defendant or the government) filed The United States’ Motion to
Dismiss Plaintiff’s Complaint Pursuant to RCFC 12(b)(1) and 12(b)(6) (defendant’s Motion or
Def.’s Mot.), Dkt. No. 13, with eight exhibits (defendant’s exhibits or Def.’s Exs.), see generally
Def.’s Exs. 1-6, Dkt. Nos. 13-1 to 13-6; Def.’s Ex. 7, Dkt. No. 15; Def.’s Ex. 8, Dkt. No. 14.
Appendix E of the Rules of the United States Court of Federal Claims (RCFC), which governs
electronically filed cases such as this one, provides that an exhibit or attachment must be filed
“electronically along with the main document under one entry number,” unless the court orders
otherwise. RCFC app. E ¶ 8(c)(i). The court GRANTS LEAVE for defendant’s exhibits to be
filed as submitted, notwithstanding that defendant’s Motion and its exhibits span multiple docket
entry numbers.

     The court cites defendant’s exhibits by the page numbers assigned by the court’s
CM/ECF system, which appear in the top right corner of each page.

                                                 2
I.     Background

        In August 2006 plaintiff filed a federal income tax return for its 2005 tax year,
reporting that it owed taxes in the amount of $21,117,565. See Compl. ¶ 8; Def.’s Mot. 2
(citing Def.’s Ex. 1 (tax year 2005 (TY 2005) certificate of assessment)). Payments and
credits to plaintiff’s 2005 tax year account totaled $18,167,100 so that, according to IRS
records, plaintiff owed a balance of $2,950,465 on its self-assessed tax liability. See
Def.’s Ex. 1 (TY 2005 certificate of assessment) 2. The payments and credits to
plaintiff’s account did not include plaintiff’s claimed overpayment of $3,361,942 for the
2003 tax year, which plaintiff requested to have credited toward its 2005 tax liability on
an amended 2003 tax return mailed on June 26, 2006. See Def.’s Ex. 2 (first amended
2003 return) 1 (providing, on line twelve, that plaintiff wanted $3,361,942 credited to
2005). On November 20, 2006 the IRS assessed plaintiff a tax deficiency of $2,950,465,
a $132,770.92 penalty for failure to pay its taxes (failure-to-pay penalty) and $157,040.75
in interest. See Def.’s Ex. 1 (TY 2005 certificate of assessment) 2. The overpayment
claimed by plaintiff on its first amended 2003 tax return appears to have been credited to
plaintiff’s account with interest on March 15, 2007. See id. (showing an overpayment
credit in the amount of $3,362,960.57).

        On June 14, 2007 plaintiff filed amended tax returns for 2003, 2004 and 2005
(collectively, the amended tax returns). See Def.’s Ex. 3 (second amended 2003 return);
Def.’s Ex. 4 (amended 2004 return); Compl. Ex. A (amended 2005 return). According to
defendant, the amended tax returns (in addition to plaintiff’s first amended 2003 return)
were filed in connection with an audit that included plaintiff’s 2003, 2004 and 2005 tax
years. See Def.’s Mot. 2-3. Among other changes, the amended tax returns reduced the
amount of plaintiff’s claimed 2003 overpayment by $395,143. See Def.’s Ex. 3 (second
amended 2003 return) 1 (showing a self-assessed tax due in the amount of $395,143); see
also Compl. Ex. A (amended 2005 return) 16 (stating that plaintiff’s overpayment carried
forward from 2003 had been reduced by $395,143). Plaintiff also claimed an
overpayment of $5,117,100 for its 2004 tax year on its amended 2004 return, which
plaintiff requested to have credited toward its 2005 tax liability. Def.’s Ex. 4 (amended
2004 return) 1. The 2004 overpayment credit was retroactively applied to plaintiff’s
2005 tax account.3 See Def.’s Ex. 1 (TY 2005 certificate of assessment) 2 (showing a
2004 overpayment credit in the amount of $5,117,100, applied on April 15, 2005).


       3
         Because the 2004 overpayment credit of $5,117,100 was retroactively applied, it was
included in the $18,167,100 of payments and credits applied to plaintiff’s 2005 tax year account.
See Def.’s Ex. 1 (tax year 2005 certificate of assessment) 2 (showing a 2004 overpayment credit
in the amount of $5,117,100, applied on April 15, 2005). Therefore, plaintiff’s claim appears to
be based only on the government’s failure to apply plaintiff’s claimed 2003 overpayment credit
of $3,361,942 to plaintiff’s $2,950,465 tax liability.

                                                3
        Defendant states that the amended tax returns were reviewed as part of the audit
process and that, “[a]t the conclusion of the examinations, the [IRS] accepted some of the
bases for plaintiff’s claims for refund[] and disallowed the others.” Def.’s Mot. 3; see
also Compl. Ex. B (notice of partial disallowance) 22 (“We have allowed part of your
claim for an adjustment to your tax for the [2003, 2004, 2005 and 2006 tax years]. We
are sorry, but we cannot allow the entire claim . . . .”). In the meantime, on October 1,
2007, the IRS had assessed plaintiff a second failure-to-pay penalty in the amount of
$44,256.98 and a second interest charge of $98,210.70. Def.’s Ex. 1 (TY 2005 certificate
of assessment) 4. The amounts assessed on November 20, 2006 and October 1, 2007 for
failure-to-pay penalties and interest total $432,279.35, see Def.’s Ex. 1 (TY 2005
certificate of assessment) 2, 4 (showing assessments for failure-to-pay penalties and
interest)--the $432,280 that plaintiff seeks to recover in this suit, see Compl. ¶¶ 7-8; id. at
11.

        As a result of the audit, on July 2, 2009, the IRS issued a notice of deficiency to
plaintiff with respect to its 2005 tax year. See Pl.’s Resp. 8-9. See generally Def.’s Ex. 5
(notice of deficiency). The notice of deficiency stated that plaintiff owed an additional
$698,705 in taxes and a $138,741 accuracy-related penalty, unrelated to the previous
assessments. See Def.’s Ex. 5 (notice of deficiency) 1, 3. The notice informed plaintiff,
“If you want to contest this determination in court before making any payment, you have
90 days from the date of this letter . . . to file a petition with the United States Tax Court.”
Id. Accordingly, on October 5, 2009 plaintiff filed a petition with the Tax Court, seeking
“a redetermination of the deficiency in tax and addition to tax [(also known as a penalty)]
set forth by the Commissioner of [the IRS] in his Notice of Deficiency dated July 2,
2009.” Def.’s Ex. 6 (Pet., Cheesecake Factory, Inc. v. Comm’r, No. 23591-09 (T.C. Oct.
5, 2009) (T.C. Pet.)) 1. Plaintiff’s case in the Tax Court was resolved on August 26,
2010, when the Tax Court entered a decision stipulated by the parties, reducing plaintiff’s
tax deficiency for its 2005 tax year to $383,743 and eliminating the accuracy-related
penalty. See Def.’s Ex. 7 (Cheesecake Factory, Inc. v. Comm’r, No. 23591-09, slip op.
(T.C. Aug. 26, 2010) (Tax Court decision or T.C. Decision)) 1.

       On October 28, 2010 plaintiff filed suit in the United States District Court for the
Central District of California (California District Court), see generally Def.’s Ex. 8
(Compl., Cheesecake Factory, Inc. v. United States, No. 2:10-cv-08157 R (FFMx) (C.D.
Cal. Oct. 28, 2010)), seeking a refund of taxes allegedly overpaid for its 2003 and 2004
tax years, “as well as related penalties and interest erroneously assessed and collected for
[its 2005 tax year],” id. at 3. Plaintiff’s case in the California District Court was resolved
on December 16, 2011, when the California District Court dismissed the case pursuant to
the parties’ settlement agreement. See Compl. Ex. D (Order on Stipulation for Dismissal
Without Prejudice to Refile until July 2, 2012, Cheesecake Factory, Inc. v. United States,
No. 2:10-cv-08157 R (FFMx) (C.D. Cal. Dec. 16, 2011) 1. The parties’ settlement

                                               4
agreement did “not include [plaintiff’s] claim for refund arising from interest and late
payment penalties assessed for the late payment of taxes due from [its] 2005 tax year,”
even though the claim was before the California District Court. Compl. Ex. C (letter
from the IRS to plaintiff) 1 (regarding the settlement agreement). Instead, the IRS
informed plaintiff that, although the IRS believed that plaintiff’s “2005 claim was
properly denied, in full,” plaintiff could “still pursue this 2005 year claim in District
Court by timely re-filing [its] suit.” Id.

       Plaintiff brought this suit seeking refund of the 2005 penalties and interest on July
2, 2012. See generally Compl.

II.    Legal Standards

       A.      Jurisdiction

        Subject matter jurisdiction is a threshold matter that a court must determine at the
outset of a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998);
PODS, Inc. v. Porta Stor, Inc., 484 F.3d 1359, 1365 (Fed. Cir. 2007). Pursuant to the
Tucker Act, the United States Court of Federal Claims (Court of Federal Claims) has
jurisdiction over “any claim against the United States founded . . . upon the Constitution,
or any Act of Congress or any regulation of an executive department, or upon any express
or implied contract with the United States.” 28 U.S.C. § 1491(a)(1) (2006). The Tucker
Act serves as a waiver of sovereign immunity and a jurisdictional grant, but it does not
create a substantive cause of action. Jan’s Helicopter Serv., Inc. v. Fed. Aviation Admin.,
525 F.3d 1299, 1306 (Fed. Cir. 2008). A plaintiff must, therefore, “‘identify a separate
source of substantive law that creates the right to money damages.’” Id. (quoting Fisher
v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in relevant part)).

       In the context of tax disputes, this means that the jurisdiction of the Court of
Federal Claims is, generally, limited to tax refund actions.4 See 28 U.S.C. § 1346(a)(1)
(granting the Court of Federal Claims concurrent jurisdiction with the federal district
courts over “[a]ny civil action against the United States for the recovery of any internal-
revenue tax alleged to have been erroneously or illegally assessed or collected, or any
penalty claimed to have been collected without authority or any sum alleged to have been
excessive or in any manner wrongfully collected under the internal-revenue laws”);
Riggle v. United States, 131 F. App’x 273, 274 (Fed. Cir. 2005) (unpublished) (citing,

       4
         For an example of a tax dispute over which the United States Court of Federal Claims
(Court of Federal Claims) had jurisdiction--notwithstanding that the plaintiff did not seek a tax
refund--see Foundation of Human Understanding v. United States, 88 Fed. Cl. 203, 208, 234
(2009) (denying plaintiff’s request for declaratory judgment and finding that the plaintiff was
“not a church” for purposes of tax exemption), aff’d, 614 F.3d 1383 (Fed. Cir. 2010).

                                                 5
inter alia, Shore v. United States, 9 F.3d 1524, 1526 (Fed. Cir. 1993)); cf. I.R.C. §
7422(a) (requiring a claim for refund or credit to be filed with the Secretary of the
Treasury (the Secretary) as a prerequisite for a tax refund suit).

       In considering a motion to dismiss for lack of subject matter jurisdiction pursuant
to Rule 12(b)(1) of the RCFC, the court must accept as true all undisputed allegations of
fact made by the non-moving party and draw all reasonable inferences from those facts in
the non-moving party’s favor. See Trusted Integration, Inc. v. United States, 659 F.3d
1159, 1163 (Fed. Cir. 2011) (citing Henke v. United States, 60 F.3d 795, 797 (Fed. Cir.
1995)). The burden is on the plaintiff to show jurisdiction by a preponderance of the
evidence. Taylor v. United States, 303 F.3d 1357, 1359 (Fed. Cir. 2002). If the court
determines that it does not have jurisdiction, it must dismiss the claim. See RCFC
12(h)(3).

       B.      Effect of a Tax Court Petition Pursuant to I.R.C. 6512(a)

        When a taxpayer receives a notice of deficiency and acts within the applicable
time limit, “the taxpayer may file a petition with the Tax Court for a redetermination of
the deficiency.” I.R.C. § 6213(a). When a taxpayer takes this course of action, “no credit
or refund of income tax for the same taxable year . . . in respect of which the Secretary
has determined the deficiency shall be allowed or made and no suit by the taxpayer for
the recovery of any part of the tax shall be instituted in any court,” except in certain
limited circumstances.5 Id. § 6512(a). Therefore, pursuant to I.R.C. § 6512(a), “if a
taxpayer properly files a petition with the Tax Court, he cannot later file a claim in the
Court of Federal Claims or in a district court to obtain a credit or refund for the same
taxable year.” Smith v. United States, 495 F. App’x 44, 48 (Fed. Cir. 2012) (per curiam)
(unpublished); see, e.g., Gustafson v. United States, 27 Fed. Cl. 451, 453-54 (1993)
(“Since [the] plaintiffs herein seek to recover part of the taxes they paid for [a particular]
tax year . . . , the same tax year covered in the . . . deficiency notice and in [the] plaintiffs’
petition to the Tax Court, the bar in Section 6512(a) applies, and this court lacks
jurisdiction to entertain the instant refund claim.”).
       5
          A taxpayer may institute a suit in another court regarding the same tax year that was
adjudicated in the United States Tax Court (Tax Court) if the suit in the other court is for
recovery of: (1) overpayments determined by a final decision of the Tax Court; (2) any amount
collected in excess of an amount computed in accordance with a final decision of the Tax Court;
(3) any amount collected after the period of limitation has expired for making levy or bringing a
proceeding in court for collection; (4) overpayments that are attributable to partnership items; (5)
any amount collected when collection or assessment was prohibited under 26 U.S.C. (I.R.C.) §
6213(a) (prohibiting collection or assessment during the period for filing in the Tax Court); or
(6) if appeal of a Tax Court decision is pending, refunds or credits authorized by the Tax Court
decision to the extent that overpayments giving rise to the refunds or credits are not contested on
appeal. See I.R.C. § 6512(a)-(b) (2006).

                                                 6
        The bar in I.R.C. § 6512(a) is applicable even if “circumstances prevented the
taxpayer from raising an issue during the earlier Tax Court proceeding.” Solitron
Devices, Inc. v. United States, 16 Cl. Ct. 561, 567 (1989); see also Jacob v. United States,
No. 97-127T, 1998 WL 549383, at *4 (Fed. Cl. July 21, 1998) (stating that the
jurisdictional bar of I.R.C. § 6512(a) “applies even in cases where the issues raised in this
court or the district court could not have been litigated in the Tax Court because they
arose from facts occurring after the Tax Court’s decision” (internal quotation marks
omitted)), aff’d per curiam, 194 F.3d 1335 (Fed. Cir. 1999) (unpublished table decision).

III.   Discussion

        Plaintiff asserts that “[j]urisdiction is conferred on this Court by [28 U.S.C. §
1491] and [I.R.C. § 7422].” Compl. ¶ 2. The court agrees with plaintiff that the court’s
jurisdiction pursuant to the Tucker Act includes claims for tax refunds, in general. Cf.
Riggle, 131 F. App’x at 274 (“Because the jurisdiction of the Court of Federal Claims is
limited to actions for the recovery of money damages or unlawful exactions, the court has
jurisdiction to adjudicate a tax dispute only in the form of a tax refund action.”); Shore, 9
F.3d at 1526 (discussing this court’s jurisdiction over tax refund suits). However, the
court’s tax refund jurisdiction is conferred by 28 U.S.C. § 1346(a)(1), not by I.R.C. §
7422. Compare 28 U.S.C. § 1346(a)(1) (granting the Court of Federal Claims
jurisdiction, concurrent with that of federal district courts, over civil actions against the
United States for the recovery of erroneously collected federal income taxes or penalties)
with I.R.C. § 7422 (governing civil actions for federal tax refunds). Moreover, the
court’s tax refund jurisdiction is limited by I.R.C. § 6512(a).

        Section 6512(a) of the Internal Revenue Code bars a taxpayer from filing a tax
refund claim in this court for the same taxable year as to which the taxpayer received a
statutory notice of deficiency and previously filed a petition in the Tax Court. See I.R.C.
§ 6512(a); Smith, 495 F. App’x at 48; see, e.g., Gustafson, 27 Fed. Cl. at 453-54 (finding
that the court lacked jurisdiction over the plaintiffs’ tax refund claim pursuant to I.R.C. §
6512(a) when the refund claimed was for the same tax year covered in the deficiency
notice and in the plaintiffs’ petition to the Tax Court). According to defendant,
“[b]ecause the tax year is the cause of action, the Tax Court resolved all issues relating to
that tax year when it entered the stipulated decision. Plaintiff may not seek to now
litigate the 2005 tax year piecemeal before this Court.” Def.’s Mot. 7; see also id. at 6
(“When plaintiff petitioned the Tax Court for a determination of its 2005 tax, it in effect
brought all issues relating to the 2005 taxable year . . . .”).

       Plaintiff responds that “[t]he Court of Claims does not lose jurisdiction over
claims before it for years in which there is a parallel proceeding in the Tax Court, unless
the Tax Court matter relates to an ‘income tax [for which the Government mails] a notice

                                              7
that a deficiency has been determined in respect of the tax which is the subject matter of
the taxpayer’s suit [in the Court of Claims.]’” Pl.’s Resp. 1 (alterations in original)
(quoting I.R.C. § 7422(e)). According to plaintiff, because the notice of deficiency in
this case (which was issued in 2009 after plaintiff’s audit by the IRS with respect to
plaintiff’s 2005 tax year) “had nothing to do with either of the interest and penalty
assessments in 2006 and 2007,” those assessments amounted to “zombie penalties and
interest” as to which “no tax ‘deficiency’ was involved.” Id. at 8-9.

        However, section 7422(e) of the Internal Revenue Code, cited by plaintiff in
support of its argument in favor of the court’s jurisdiction, see Pl.’s Resp. 6, is not
relevant to this case because it pertains to cases filed prior to the issuance of a notice of
deficiency. Specifically, section 7422(e) provides that, if a notice of deficiency is mailed
“prior to the hearing of a suit brought by a taxpayer in a district court or the . . . Court of
Federal Claims for the recovery of any income tax . . . (or any penalties relating to such
taxes) . . . , the proceedings in [the] taxpayer’s suit shall be stayed” until the expiration of
“the period of time in which the taxpayer may file a petition with the Tax Court for a
redetermination of the asserted deficiency.” I.R.C. § 7422(e). If the taxpayer then files a
petition with the Tax Court in response to the notice of deficiency, the district court or the
Court of Federal Claims (depending on where the original suit was brought) “shall lose
jurisdiction of [the] suit to whatever extent jurisdiction is acquired by the Tax Court.” Id.

        Here, when the notice of deficiency was issued on July 2, 2009, plaintiff had not
yet filed this suit, nor was any suit pending in this court or any district court at the time
that plaintiff filed its petition in the Tax Court on October 5, 2009. See supra Part I.
Accordingly, plaintiff’s reliance on section 7422(e) is misplaced. Nevertheless, the court
notes that, even if section 7422(e) applied, the Tax Court’s jurisdiction under section
7422(e) would still include the entire subject of the correct tax for the particular year.
See Erickson v. United States, 159 Ct. Cl. 202, 216, 309 F.2d 760, 767 (1962) (stating
that, once the Tax Court’s jurisdiction attaches, it “extends to the entire subject of the
correct tax for the particular year”); cf. Tonasket v. United States, 218 Ct. Cl. 709, 711
(1978) (“We need not decide whether section 6512(a) alone governs or whether section
7422(e) likewise controls. Congress, it is very plain, desired that in this situation the Tax
Court proceeding should displace a refund suit. Both sections clearly point in that
direction.”).

       Plaintiff also argues that, notwithstanding the preclusive effect of filing suit in the
Tax Court, this court retains jurisdiction over its present refund claim “because the Tax
Court never could have acquired any jurisdiction over the issues herein.”6 Pl.’s Resp. 1,
       6
          Defendant argues that, contrary to plaintiff’s assertion, the failure-to-pay penalties and
interest at issue would have been within the Tax Court’s jurisdiction over plaintiff’s 2005 tax
year because the Tax Court’s overpayment jurisdiction properly includes additions to tax that

                                                  8
have been paid by the plaintiff. See The United States’ Reply to Pl.’s Opp’n to the United
States’ Mot. to Dismiss (Def.’s Reply), Dkt. No. 29, at 4-6.

        In support of its position, defendant cites Judge v. Commissioner, 88 T.C. 1175 (1987),
acq. 1988-2 C.B. 1. See Def.’s Reply 4-6. In Judge, the Tax Court considered whether it had
jurisdiction over failure-to-pay penalties assessed as a result of reported tax liabilities shown on
the taxpayers’ return (as in the present case), as distinguished from failure-to-pay penalties
assessed as a result of a determination of tax deficiency by the Commissioner of the Internal
Revenue Service (IRS) (the Commissioner) in accordance with statutory deficiency procedures.
See Judge, 88 T.C. at 1176, 1181. The Tax Court concluded that “all additions to a tax are to be
considered part of such tax in determining the amount of an overpayment.” Id. at 1183. Further,
the Tax Court held that I.R.C. § 6512(b), which provides the Tax Court with jurisdiction to
determine overpayments, is broad enough to encompass “additions to tax whether or not such
additions are subject to the deficiency procedures.” Id. at 1185. Based on Judge, defendant
argues that, because the Tax Court had jurisdiction over plaintiff’s 2005 tax year as a result of
the notice of deficiency and plaintiff’s Tax Court petition, “[t]he Tax Court also thereby acquired
overpayment jurisdiction over the additions-to-tax (already paid by plaintiff) that the
Commissioner had determined, apart from [the notice of] deficiency, on the basis of the amounts
listed on plaintiff’s return.” Def.’s Reply 6. Defendant notes--correctly--that the cases cited by
plaintiff with respect to this issue, see Pl.’s Opp’n to Def.’s Mot. to Dismiss Pursuant to RCFC
12(b)(1) and 12(b)(6) (Pl.’s Resp.), Dkt. No. 24, at 4 (citing Estate of Forgey v. Comm’r, 115
T.C. 142, 146 (2000); Newby’s Plastering, Inc. v. Comm’r, 76 T.C.M. (CCH) 399 (1998)), are
distinguishable because, in each of the cases cited by plaintiff, there was not (as there was here)
any deficiency with respect to the relevant tax year, see Def.’s Reply 3-4, 4 n.3; cf. Estate of
Forgey, 115 T.C. at 147 (holding that the Tax Court lacked jurisdiction because no deficiency in
tax existed in the “anomalous” situation that the parties’ settlement following the issuance of a
notice of deficiency resulted in an overassessment in tax--meaning that “the tax imposed on the
estate [did] not exceed the amount of tax shown on the estate tax return”); Newby’s Plastering,
Inc., 76 T.C.M. (CCH) 399 (holding that the Tax Court lacked jurisdiction because the petitioner
sought redetermination of additions to tax only, without challenging any notice of deficiency).

         Defendant also relies on Estate of Baumgardner v. Commissioner (Baumgardner), 85
T.C. 445 (1985), for the proposition that “the Tax Court’s jurisdiction over overpayments
pursuant to § 6512(b) include[s] overpayments of interest.” Def.’s Reply 8. Indeed,
Baumgardner states, “Interest may be part of an overpayment if the interest accrued and was paid
prior to the time the overpayment was claimed or arose.” Baumgardner, 85 T.C. at 452.
Defendant correctly notes, see Def.’s Reply 8 n.6, that the case cited by plaintiff in support of its
argument that the Tax Court lacks jurisdiction over interest redeterminations is no longer good
law, see Pl.’s Resp. 17 (citing Bax v. Comm’r, 13 F.3d 54, 56-57 (2d Cir. 1993), superseded by
statute, Taxpayer Bill of Rights 2 § 302, Pub. L. No. 104-168, 110 Stat. 1452, 1457-58 (1996)
(codified as amended in relevant part at I.R.C. 6404(h)), as recognized in Hinck v. United States,
550 U.S. 501 (2007)).


                                                 9
13; see also id. at 12 (“[T]he law deprived the Tax Court of jurisdiction to decide the very
matters at issue herein as set forth below. Thus, section 6512 does not apply.”), 19-20
(similar) (citing, without explanation, Montana v. United States, 440 U.S. 147, 164

        Further, defendant argues that whether the Secretary of the Treasury (the Secretary)
properly applied overpayment credits under I.R.C. § 6402--an issue that defendant characterizes
as “plaintiff’s basis for the suit”--“is a matter entirely entrusted to the discretion of the
Secretary.” Def.’s Reply 1-2; cf. Compl. ¶ 1 (describing the cause of action as arising “due to
Defendant’s failure to properly credit prior year overpayments as it was instructed to do pursuant
to [I.R.C.] § 6402”). Nevertheless, defendant contends that the Tax Court retains jurisdiction
under I.R.C. § 6512(b)(4) to hear a claim that a plaintiff made an overpayment as a result of an
alleged improperly applied credit. See Def.’s Reply 11-12; see also I.R.C. § 6512(b)(4) (“The
Tax Court shall have no jurisdiction under this subsection to restrain or review any credit or
reduction made by the Secretary under section 6402.”). Defendant relies on Winn-Dixie Stores,
Inc. v. Commissioner (Winn-Dixie), 110 T.C. 291 (1998), see Def.’s Reply 11-12, in which the
Tax Court held that I.R.C. § 6512(b) did not deny it jurisdiction when the petitioner in that case
claimed that it made overpayments as a result of the Secretary’s failure to apply overpayment
credits to later tax years, see Winn-Dixie, 110 T.C. at 294-95. According to defendant, the Tax
Court is divested of jurisdiction only if the taxpayer seeks “to ‘restrain or prevent’ the IRS from
using credits to reduce a refund,” which it argues is not the case here because plaintiff complains
only about overpayments of penalties and interest and “does not challenge its refund for the
years in question.” Id. at 11-12 (quoting Winn-Dixie, 110 T.C. at 294).

         Defendant also contends that, to the extent that plaintiff’s claim is based on I.R.C. §
6404(a), the Tax Court has exclusive jurisdiction to provide judicial review. Id. at 8-9; cf.
Compl. ¶ 12 (invoking I.R.C. § 6404(a)); I.R.C. § 6404(a) (providing the Secretary with
authority “to abate the unpaid portion of the assessment of any tax or any liability in respect
thereof, which . . . is erroneously or illegally assessed”). Defendant cites to Hinck in support of
this proposition. See Def.’s Reply 8-9. In Hinck, the United States Supreme Court held that
I.R.C. § 6404(h), which provides the Tax Court with authority to review of the Secretary’s
failure to abate interest, must be interpreted to define the Tax Court’s jurisdiction as exclusive.
Hinck, 550 U.S. at 503, 506.

        Although the court need not reach the question of whether the Tax Court would have had
jurisdiction over plaintiff’s present claim, cf. Solitron Devices, Inc. v. United States, 16 Cl. Ct.
561, 567 (1989) (stating that, even if “circumstances prevented the taxpayer from raising an issue
during the earlier Tax Court proceeding,” the taxpayer is barred from filing a claim for credit or
refund of tax for the same taxable year as was litigated in the Tax Court); Jacob v. United States,
No. 97-127T, 1998 WL 549383, at *4 (Fed. Cl. July 21, 1998) (stating that the jurisdictional bar
of I.R.C. § 6512(a) “applies even in cases where the issues raised in this court or the district
court could not have been litigated in the Tax Court” (internal quotation marks omitted)), aff’d
per curiam, 194 F.3d 1335 (Fed. Cir. 1999) (unpublished table decision), the court observes that
defendant appears to be correct, at least in part, on this point.


                                                 10
(1979)). The only authority cited by plaintiff with respect to this proposition, Montana v.
United States, see Pl.’s Resp. 19-20, offers no support for plaintiff’s position that the
court can discern, cf. Montana, 440 U.S. at 163-64 (holding that the government was
estopped from relitigating in federal court the Montana Supreme Court’s decision that a
Montana state tax was constitutional).7 Plaintiff also relies on the notice of partial
disallowance with respect to the amended tax returns, see Pl.’s Resp. 10, which stated
that plaintiff “may . . . fil[e] suit with the United States District Court having jurisdiction,
or the [Court of Federal Claims]” if it “wish[ed] to bring suit . . . for the recovery of any
tax, penalties, or other moneys for which this disallowance notice [was] issued,”8 Compl.
Ex. B (notice of partial disallowance) 22. Plaintiff contends that the notice of partial
disallowance “recognized Plaintiff’s right to bring a separate action before the Court of
[Federal] Claims with respect to these refund claims for interest and [failure-to-pay]
penalties.” Pl.’s Resp. 10.

        Defendant argues that I.R.C. § 6512(a) is applicable and bars plaintiff’s present
claim because plaintiff received a notice of deficiency for the 2005 tax year and timely
filed a petition with the Tax Court seeking a redetermination with respect to the notice of
deficiency. Def.’s Mot. 5; cf. I.R.C. § 6512(a) (providing that, when a taxpayer files a
petition in the Tax Court in response to a notice of deficiency, “no credit or refund of
income tax for the same taxable year . . . in respect of which the Secretary has determined
the deficiency shall be allowed or made and no suit by the taxpayer for the recovery of

       7
         The court notes that, although not cited by plaintiff specifically, see Pl.’s Resp. 20
(citing Montana v. United States, 440 U.S. 147, 164 (1979)), plaintiff may have intended to rely
on footnote eleven of Montana v. United States, see Montana, 440 U.S. at 164 n.11
(“Redetermination of issues is warranted if there is reason to doubt the quality, extensiveness, or
fairness of procedures followed in prior litigation.”). However, because plaintiff “has not alleged
unfairness or inadequacy in the [Tax Court] procedures to which it voluntarily submitted,” cf.
Montana, 440 U.S. at 163-64, footnote eleven of Montana does not support plaintiff’s position.
       8
           Plaintiff alleges that a similar statement by an IRS employee, who “was fully aware of
the Tax Court matter but nonetheless conceded, orally and in writing, that the matter could be
pursued in the District Court or Court of [Federal] Claims,” could be the basis of a claim for
“governmental estoppel.” Pl.’s Resp. 11 n.3; see also Compl. ¶ 11 (describing representations
made by the IRS “Audit Team”). Plaintiff’s allegation fails to recognize that, because “no action
of the parties can confer subject-matter jurisdiction upon a federal court[,] . . . the consent of the
parties is irrelevant, [and] principles of estoppel do not apply.” Ins. Corp. of Ir. v. Compagnie de
Bauxites de Guinee, 456 U.S. 694, 702 (1982) (internal citation omitted); see Dunklebarger v.
Merit Sys. Prot. Bd., 130 F.3d 1476, 1480 (Fed. Cir. 1997) (“[T]he principles of estoppel do not
apply to vest subject-matter jurisdiction where Congress has not done so.”); Colman v. United
States, 96 Fed. Cl. 633, 639 (2011) (concluding that, even if the IRS had consented to be sued in
a letter, the government could not be estopped from arguing that this court lacked jurisdiction on
that basis).

                                                 11
any part of the tax shall be instituted in any court”). See generally Def.’s Exs. 5 (notice
of deficiency), 6 (T.C. Pet.). Although defendant acknowledges that no separate notice of
deficiency was issued with respect to the penalties and interest at issue, Def.’s Reply 2-3
(stating that “the failure-to-pay penalties assessed in this case were explicitly exempted
from the [Internal Revenue] Code’s [statutory] deficiency procedures”); cf. Pl.’s Resp. 2
(arguing that “the Government concedes (correctly) that the notice of deficiency . . . that
conferred jurisdiction upon the Tax Court had nothing to do with the interest, and
failure[-]to[-]pay penalties”), defendant argues that no separate notice of deficiency was
required for section 6512 to apply because “plaintiff was already properly under the
jurisdiction of the Tax Court with respect to its 2005 tax year because of the petition it
filed there,” Def.’s Reply 3. Defendant also notes, correctly, that the IRS cannot confer
jurisdiction upon this court by mentioning in a notice of partial disallowance that the
Court of Federal Claims is a proper forum for a tax refund suit. See Def.’s Reply 7 n.5;
cf. Ins. Corp. of Ir. v. Compagnie de Bauxites de Guinee, 456 U.S. 694, 702 (1982)
(“[N]o action of the parties can confer subject-matter jurisdiction upon a federal court.”);
Riggle, 131 F. App’x at 275 (finding that “the IRS could not create jurisdiction in the
Court of Federal Claims by stipulation”); Colman v. United States, 96 Fed. Cl. 633, 639
(2011) (“The IRS’s expressed consent to be sued in its form letter is immaterial. The
IRS’s letter cannot confer jurisdiction upon this Court.”).

        Pursuant to I.R.C. § 6512(a), this court lacks jurisdiction over a tax refund case if
the plaintiff seeks a refund for the same tax year covered in a deficiency notice and in the
plaintiff’s petition to the Tax Court. See I.R.C. § 6512(a); Smith, 495 F. App’x at 48.
Here, plaintiff properly filed a Tax Court petition in response to a notice of deficiency
issued with respect to its 2005 tax year. Compl. ¶ 17; see also Def.’s Exs. 5 (notice of
deficiency), 6 (T.C. Pet.). Therefore, pursuant to I.R.C. § 6512(a), “no credit or refund of
income tax for the same taxable year . . . in respect of which the Secretary has determined
the deficiency shall be allowed . . . and no suit by the taxpayer for the recovery for any
part of the tax shall be instituted in any court.” I.R.C. § 6512(a). It is immaterial whether
“the Commissioner issue[d] a Notice of Deficiency with respect to the penalties [and
interest] . . . which are the subject of this Complaint,” cf. Pl.’s Resp. 26, because the bar
in I.R.C. § 6512(a) applies as long as “the Secretary has mailed to the taxpayer a notice of
deficiency” and “the taxpayer [has properly] file[d] a petition with the Tax Court . . . for
the same taxable year,” I.R.C. § 6512(a).

        Nevertheless, plaintiff argues that its present claim should not be barred by I.R.C.
§ 6512(a) because of the exception described in I.R.C. § 6512(a)(2) for amounts collected
in excess of an amount computed in accordance with a final decision of the Tax Court.
See Pl.’s Resp. 16. Plaintiff contends that this “exception could arguably apply” given
that the IRS collected the full $383,733 tax deficiency determined by the Tax Court plus


                                             12
the $432,280 in interest and penalties at issue here. See id. (citing Def.’s Exs. 1 (TY
2005 certificate of assessment), 7 (T.C. Decision)). Plaintiff’s argument is misplaced.

        The provision cited by plaintiff exempts from the litigation bar contained in I.R.C.
§ 6512(a) “any amount collected in excess of an amount computed in accordance with [a]
decision of the Tax Court which has become final.” I.R.C. § 6512(a)(2). Here, the
penalties and interest at issue were assessed in 2006 and 2007, see Def.’s Ex. 1 (TY 2005
certificate of assessment) 2 (showing 2006 assessment), 4 (showing 2007 assessment),
and were paid by plaintiff before plaintiff filed suit in the Tax Court in October 2009, see
Pl.’s Resp. 9 (stating that plaintiff paid the assessed penalties and interest “under protest,
and then timely filed a refund claim with the [IRS]”); Def.’s Mot. 2 (stating that plaintiff
paid the 2006 assessment in full on March 15, 2007 and the 2007 assessment in full on
October 1, 2007). Plaintiff’s Tax Court case was resolved by a stipulated decision,
stating that there remained “a deficiency in income tax due from petitioner for the taxable
year 2005 in the amount of $383,743.00” but no “penalty due . . . under the provisions of
I.R.C. § 6662(a).” Def.’s Ex. 7 (T.C. Decision) 1. The Tax Court decision, therefore,
pertained only to amounts still due at the time of the decision. See id. Penalties and
interest paid prior to the Tax Court decision cannot be said to have been “collected in
excess” of the remaining $383,743 balance determined by the Tax Court. Cf. I.R.C. §
6512(a)(2).

        In addition, to the extent that plaintiff can be understood to argue that failure-to-
pay penalties “are not ‘tax’” pursuant to I.R.C. § 6665(b), cf. Pl.’s Resp. 11 (arguing that,
because failure-to-pay penalties “are not ‘tax’ . . . the Tax Court does not have
jurisdiction to adjudicate them”), 21-23 (similar), and therefore are not subject to subject
to the bar in I.R.C. § 6512(a), plaintiff is mistaken. Section 6665(b) states that failure-to-
pay penalties are not treated as tax only “[f]or purposes of subchapter B of chapter 63
(relating to deficiency procedures[)].” I.R.C. § 6665(b). “Section 6512, however, is not
part of subchapter B of chapter 63.” Judge v. Comm’r, 88 T.C. 1175, 1183 (1987), acq.
1988-2 C.B. 1. For matters outside of subchapter B of chapter 63 of the Internal Revenue
Code, failure-to-pay penalties are treated as tax. Cf. id. (stating that a “literal reading” of
the applicable provisions “lead[s] to the conclusion that all additions to a tax are to be
considered part of such tax in determining the amount of an overpayment”); I.R.C. §
6665(a)(2) (stating the general rule that “any reference in [the Internal Revenue Code] to
‘tax’ imposed by [the Internal Revenue Code] shall be deemed also to refer to . . .
additions to the tax, additional amounts, and penalties”). Because plaintiff now seeks “a
refund of income tax for the same taxable year” as to which plaintiff received a notice of
deficiency and filed a petition in the Tax Court--that is, plaintiff seeks a refund of
penalties and interest assessed and paid in relation to plaintiff’s 2005 tax year, cf. I.R.C
§§ 6665(a)(2) (treating penalties as tax, generally), 6601(e)(1) (treating interest as tax,


                                              13
generally)--this court lacks jurisdiction over plaintiff’s claim, cf. I.R.C. § 6512(a); Smith,
495 F. App’x at 48.

        For the foregoing reasons, defendant’s Motion, to the extent that it seeks dismissal
for lack of jurisdiction, is GRANTED and, to the extent that it seeks dismissal for failure
to state a claim upon which relief can be granted,9 is DENIED as MOOT. The Clerk of
Court SHALL ENTER JUDGMENT for defendant. No costs.

       IT IS SO ORDERED.


                                                             s/ Emily C. Hewitt
                                                             EMILY C. HEWITT
                                                             Chief Judge




   9
     The court notes that, based on the facts alleged by plaintiff, plaintiff’s present claim would
likely be barred even if I.R.C. § 6512(a) were not applicable. Because the Tax Court’s
jurisdiction attaches “to the entire subject” of the tax year before it, see Erickson v. United
States, 159 Ct. Cl. 202, 216, 309 F.2d 760, 767 (1962), and because plaintiff petitioned the Tax
Court for a redetermination of its 2005 tax deficiency, see generally Def.’s Exs. 6 (Pet.,
Cheesecake Factory, Inc. v. Comm’r, No. 23591-09 (T.C. Oct. 5, 2009)), 7 (Cheesecake Factory,
Inc. v. Comm’r, No. 23591-09, slip op. (T.C. Aug. 26, 2010)), the court--even if it had
jurisdiction--would likely be required to dismiss plaintiff’s claim based on a theory of res
judicata, see Curtin v. United States, 102 Fed. Cl. 769, 772 (2012) (“[W]hen a taxpayer petitions
the Tax Court for a redetermination, the Court of Federal Claims must dismiss any claims
seeking a refund of overpayments.”); see also Erickson, 159 Ct. Cl. at 217, 309 F.2d at 768
(stating that a Tax Court decision entered on the basis of a stipulated agreement is res judicata
for the years involved).


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