Rivero v. Fidlty Investments, 1 F.4th 340

Plaintiff Carmela Rivero (Texas resident, Mexican citizen) opened a Fidelity brokerage account in 2010, re-registered it as joint tenancy with right of survivorship naming Jorge Medrano (Mexican citizen). Medrano died in 2016.
Fidelity refused to re-register the account solely in Rivero’s name without an IRS transfer certificate (Form 5173), citing Treasury Regulation §20.6325-1 governing transfers for nonresident decedents.
Rivero sued for a declaratory judgment that no transfer certificate was necessary because (1) the account passed to her by survivorship under state law (so no transfer occurred) and (2) the decedent’s U.S.-situated estate was under $60,000 due to exclusions, so the regulation’s certificate requirement did not apply.
The district court sua sponte dismissed the complaint for lack of subject-matter jurisdiction, concluding the requested declaration would require a determination “with respect to Federal taxes” and is barred by the Declaratory Judgment Act’s federal-tax exception.
Rivero appealed; the Fifth Circuit reviewed de novo whether the DJA’s federal-tax exception is jurisdictional and whether Rivero’s requested relief necessarily involves a federal-tax determination.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the DJA federal-tax exception is jurisdictional	The exception is nonjurisdictional and may be waived; court can decide merits	Fidelity did not contest jurisdiction but relied on tax regs requiring certificate	The federal-tax exception is jurisdictional and divests the court of power to grant declaratory relief in tax-related cases
Whether Rivero’s requested declaration necessarily involves a determination “with respect to Federal taxes”	No — account passed by state survivorship law and exclusions mean Medrano’s U.S. estate ≤ $60,000, so no tax determination needed	Determining necessity of a transfer certificate requires construing Treasury regulations and valuing the decedent’s U.S. estate — a federal-tax determination	Yes — deciding Rivero’s claim would inevitably require construing tax provisions and valuing the estate, thus implicating federal taxes and triggering the DJA exception
Whether the case should be dismissed sua sponte despite no jurisdictional challenge from Fidelity	Rivero implied the court could reach the merits since defendant did not raise jurisdiction	Court must determine jurisdiction sua sponte and dismiss if lacking	District court properly dismissed sua sponte because subject-matter jurisdiction was lacking under the DJA exception

Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (distinguishing jurisdictional conditions from nonjurisdictional statutory limitations)
United States v. Cotton, 535 U.S. 625 (2002) (subject-matter jurisdiction cannot be waived)
Jolly v. United States, 488 F.2d 35 (5th Cir. 1974) (Declaratory Judgment Act does not itself confer jurisdiction)
Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010) (claim-processing rules vs. jurisdiction)
Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (jurisdictional statutes speak to court’s power)
Warren v. United States, 874 F.2d 280 (5th Cir. 1989) (federal-tax exception bars declaratory relief in tax cases)
Matter of Westmoreland Coal Co., 968 F.3d 526 (5th Cir. 2020) (Anti-Injunction Act is jurisdictional)
Hotze v. Burwell, 784 F.3d 984 (5th Cir. 2015) (jurisdictional effect of tax-related statutory bars)
McCabe v. Alexander, 526 F.2d 963 (5th Cir. 1976) (federal-tax exception at least as broad as the Anti-Injunction Act)
Bob Jones Univ. v. Simon, 416 U.S. 725 (1974) (scope of federal-tax exceptions to equitable relief)