Diamond v. United States
115 Fed. Cl. 516
Fed. Cl.2014Background
- Pro se Plaintiffs Diamond and Del Rosario reside in Tokyo and challenged IRS actions tied to 2006-2011 taxes and a 2008 frivolous filing penalty.
- IRS communications in 1994–2010 involved public display of Diamond’s SSN and attempts to obtain ITINs; plaintiffs also pursued alternative identification numbers.
- IRS treated 2006 and 2007 returns as frivolous under 26 U.S.C. § 6702, initiating a $5,000 2008 penalty; several related notices and liens followed.
- Plaintiffs filed a single complaint in the U.S. Court of Federal Claims on April 25, 2013 seeking refunds for 2006–2011 and abatement of the 2008 fee.
- The Government moved to dismiss under RCFC 12(b)(1), 12(b)(6), and later under Rule 56; the court treated the motion as one for summary judgment.
- Court outcome: the Government’s August 23, 2013 motion to dismiss is granted and the complaint is dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has jurisdiction to abate the 2008 fee | Plaintiffs argue due process and improper treatment of the 2008 fee. | Full payment prerequisite under Flora v. United States bars jurisdiction over abatement claim. | No jurisdiction; abatement claim dismissed. |
| Whether Plaintiffs state a claim for refunds for 2006–2011 | Overpayments were not fully offset by credits; refunds sought. | IRS credited overpayments to other year liabilities; no remaining to refund. | No entitlement to further refunds; claims dismissed. |
| Whether the full payment rule applies to penalties under §6702 in this refund action | Penalty may be challengeable notwithstanding partial payment. | Full payment required before refund action; penalties governed accordingly. | Rule applied; prepayment requirement satisfied only as to a refund claim; here not met for the 2008 penalty. |
| Whether claims rely on inconsistent Tax Court stipulations or records | Tax Court decisions and payoff calculations show discrepancies; warrant relief. | Records are consistent for purposes of defense; discrepancies do not create jurisdictional relief. | Insufficient factual content; claim dismissed. |
| Whether the court should grant any other relief given the record | Judicial relief is warranted for improper penalties and credits. | No further relief possible where refunds are offset and penalties remain unpaid. | Court grants motion to dismiss; no relief awarded. |
Key Cases Cited
- Flora v. United States, 357 U.S. 63 (U.S. 1958) (refund suits require full payment of the tax due before suit)
- Ledford v. United States, 297 F.3d 1378 (Fed. Cir. 2002) (full payment prerequisite to refund jurisdiction)
- Rocovich v. United States, 933 F.2d 991 (Fed. Cir. 1991) (presumptive correctness of IRS assessments; certificates prove validity)
- Shore v. United States, 9 F.3d 1524 (Fed. Cir. 1993) (full payment rule; refunds require payment before suit)
- Becker v. United States, 878 F.2d 1444 (Fed. Cir. 1989) (application of 6402 credits; penalties and refunds interplay)
- Danville Lumber Co. v. United States, 899 F.2d 3 (Fed. Cir. 1990) (tax refund de novo standard of proof against IRS determinations)
- Helvering v. Taylor, 293 U.S. 507 (U.S. 1935) (burden on taxpayer to show Commissioner’s determination invalid)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard; material facts need not be disputed to grant)