79 F.4th 675
6th Cir.2023Background:
- In 2019 Jarrett produced 8,876 Tezos tokens by "staking" and did not sell or transfer them that year; the IRS treated staking rewards as taxable when received.
- Believing the tokens were not taxable until sale, Jarrett reported them as income, paid the tax, and later sought a refund of $3,793 (plus interest) after the IRS did not timely deny his claim.
- Jarrett filed a refund suit seeking (1) a refund judgment, (2) costs and attorney’s fees, and (3) a permanent injunction preventing the IRS from treating tokens created by the Jarretts as income.
- The Attorney General conceded Jarrett’s 2019 overpayment, the IRS adjusted his account, and mailed a refund check for $4,001.83 plus a Notice of Adjustment stating the payment reflected the government’s concession.
- Jarrett refused to cash the check and sought to litigate the legal issue; the district court dismissed the case as moot. The Sixth Circuit affirmed.
Issues:
| Issue | Plaintiff's Argument (Jarrett) | Defendant's Argument (IRS) | Held |
|---|---|---|---|
| Whether issuance and mailing of a full refund check moots a tax refund suit | The check is an offer that he may reject; Campbell‑Ewald controls so unaccepted payment does not moot | Mailing a full, unconditional refund is a tender of complete relief that moots the refund claim | Mailing a full refund check (and account adjustment) moots a refund suit even if plaintiff hasn't cashed the check |
| Whether an uncashed check preserves a live controversy | Refusal to cash distinguishes this from an actual payment; the case remains justiciable | What matters is the government’s tender/payment by mail; plaintiff’s refusal is irrelevant | An uncashed mailed refund check still constitutes payment for mootness purposes; plaintiff’s refusal does not prevent mootness |
| Whether Campbell‑Ewald’s offer‑rejection rule controls here | Campbell‑Ewald shows an unaccepted payment/offer cannot moot a suit | Campbell‑Ewald involved an offer in a putative class action; it did not address actual payment/tender | Campbell‑Ewald is distinguishable; actual payment/tender moots claims, and class‑action concerns do not apply here |
| Whether non‑monetary and collateral claims (injunction, declaratory relief, costs/fees) keep the case live | Requests for injunction and judgment about tax treatment and recovery of fees keep controversy alive | Refund suits are retrospective; injunctions to restrain future assessment are barred by the Anti‑Injunction Act and declaratory relief on taxes is limited | Prospective relief and declaratory judgments about future tax treatment do not preserve jurisdiction once the refund claim is fully satisfied; costs/fees alone do not save the case |
Key Cases Cited
- Comm’r v. Glenshaw Glass Co., 348 U.S. 426 (1955) (defining gross income and realization principles)
- Campbell‑Ewald Co. v. Gomez, 577 U.S. 153 (2016) (unaccepted settlement offer does not moot a claim; distinguished from actual payment)
- Peugh v. Davis, 113 U.S. 542 (1885) (tender requires actual delivery of the sum due)
- Already, LLC v. Nike, Inc., 568 U.S. 85 (2013) (case remains live despite ongoing dispute over lawfulness if plaintiff still seeks relief; but mootness can follow full redress)
- Lamb v. Comm’r, 390 F.2d 157 (2d Cir. 1968) (government tender of full refund mooted a refund suit)
- Drs. Hill & Thomas Co. v. United States, 392 F.2d 204 (6th Cir. 1968) (same principle applied in this circuit)
- Russell v. United States, 661 F.3d 1371 (Fed. Cir. 2011) (delivered check mooted damages claim despite failure to cash)
- Christian Coal. of Fla., Inc. v. United States, 662 F.3d 1182 (11th Cir. 2011) (absent a live refund claim, courts lack jurisdiction over forward‑looking tax relief)