113 Fed. Cl. 84
Fed. Cl.2013Background
- Kaplan seeks a tax refund of three $100 payments toward a trust fund recovery penalty under 26 U.S.C. § 6672 for Merchants Restaurant-SA, LLC’s withholding tax failures in 2008.
- IRS assessed $86,902.76 each as penalties; Kaplan is a managing member implicated in the failure to remit withholding taxes.
- Kaplan paid $100 toward the penalties in three installments and sought refunds via Form 843.
- IRS denied refunds; Kaplan filed suit in the U.S. Court of Federal Claims requesting dismissal or refund.
- Government moved to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction due to the full-payment rule and divisibility exception.
- Court grants the Government’s motion, concluding Kaplan failed to satisfy the full-payment rule for a divisible tax by evidence in the record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kaplans’s $100 payments satisfy the full-payment rule. | Kaplan argues divisible tax rule allows partial payment. | Government says partial payment insufficient; test-case limited by evidence. | No; full-payment rule not satisfied. |
| Whether the divisible tax exception applies to § 6672 penalties. | Kaplan relies on case law permitting partial payment for divisible taxes. | Divisible-tax exception requires evidence supporting per-employee amount. | Not satisfied based on record evidence. |
| Whether Cohan v. Commissioner applies to tax refund jurisdiction here. | Kaplan cites Cohan to support estimation of payment. | Cohan not applicable to payroll-tax case; estimation not adequate. | Inapplicable; cannot fulfill jurisdiction. |
Key Cases Cited
- Flora v. United States, 362 U.S. 145 (1960) (full-payment rule; divisibility concept later refined)
- Shore v. United States, 9 F.3d 1524 (Fed. Cir. 1993) (divisible tax exception to full-payment rule)
- Godfrey v. United States, 784 F.2d 1568 (Fed. Cir. 1984) (test-case concept for one employee’s withholding tax)
- Ruth v. United States, 823 F.2d 1091 (7th Cir. 1987) (recognizes partial-payment viability under divisibility)
- Boynton v. United States, 566 F.2d 50 (9th Cir. 1977) (divisible tax reasoning for multiple employees)
- Hinck v. United States, 446 F.3d 1307 (Fed. Cir. 2006) (jurisdictional basis under 28 U.S.C. § 1491(a))