United States District Court, D. Colorado
DON J. and JANICE E. MEINHOLD, Plaintiffs,
UNITED STATES OF AMERICA, Defendant.
R. BROOKE JACKSON, UNITED STATES DISTRICT JUDGE.
This matter is before the Court on the government’s Motion for Summary Judgment, ECF No. 18. For the reasons discussed in this Order, defendant’s motion is granted.
Plaintiffs Don and Janice Meinhold (“the Meinholds”) filed their 2007 Form 1040 income tax return around October 15, 2008. ECF No. 1 at ¶ 8. Their tax return reported flow-through income from the sale of an entity called DJM, LLC (“DJM”). Id. at ¶ 9. DJM filed a Form 1065 tax return for the 2007 taxable year. Id. DJM subsequently discovered an error on its return and filed an amended Form 1065 and a Form K-1 setting forth the Meinholds’ revised flow-through income from the sale of DJM. Id. at ¶ 10. As a result, around December 23, 2008, the Meinholds filed their first amended return (“First Amended Return”), Form 1040X, claiming a refund of $321, 947.00. Id. at ¶ 11; ECF No. 18-3 (Ex. LY-2). The Internal Revenue Service (“IRS”) granted the requested refund by abating the Meinholds’ 2007 tax in that amount. ECF No. 18 at 2; ECF No. 18-6 (Ex. LY-5) at 4.
After filing their First Amended Return, the Meinholds discovered that it contained a mathematical error regarding their flow-through income from the sale of DJM. ECF No. 1 at ¶ 12. Around May 1, 2010, the Meinholds claim that they signed and dated a second amended return (“Second Amended Return”) that corrected the error. Id. at ¶ 13. It made no reference to the First Amended Return, but it contained the same “explanation of changes.” ECF No. 18 at 6; ECF No. 18-8 (Ex. LY-7). The Second Amended Return claimed a refund of $432, 070.00. ECF No. 1 at ¶ 13. The Meinholds allege that they placed the Second Amended Return in an envelope addressed to the IRS service center in Fresno, California, affixed the envelope with postage, and placed the envelope in a U.S. Mail collection slot at their residence. Id. at ¶ 14. The IRS has no record of receiving it. ECF No. 14 at 2.
When the Meinholds did not receive the refund that they claimed in the Second Amended Return, they attempted to contact the IRS by phone but were unsuccessful. ECF No. 1 at ¶ 17. Around July 5, 2011, the Meinholds mailed a letter (“July Letter”) to the IRS. ECF No. 20-7 (Ex. NR-10). It stated, “In early May, 2010 we filed an amended Federal Individual Income Tax Return for the calendar year 2007 with the Fresno IRS office. This return requested a substantial refund.” Id. It asked the IRS to advise them of the status of their refund application and whether they needed to “do anything else to expedite the refund.” Id.
On August 8, 2011, the IRS replied to the July Letter stating in part, “We haven’t resolved this matter because we haven’t completed all the research necessary for a complete response. We will contact you again within 45 days . . . You don’t need to do anything further now[.]” ECF No. 20-8 (Ex. NR-11). On September 21, 2011, the IRS sent the Meinholds a second letter asking them to “allow an additional 45 days for us to obtain the information we need and to let you know what action we are taking.” ECF No. 20-9 (Ex. NR-12). Finally, on January 20, 2012, the IRS sent the Meinholds a letter stating, “We have no record of receiving your tax return . . . please send us a NEWLY SIGNED copy of your return.” ECF No. 20-10 (Ex. NR-13). The Meinholds then sent the IRS a newly signed copy of the Second Amended Return. ECF No. 1 at ¶ 22.
In a letter dated March 15, 2012, the IRS informed the Meinholds that it could not allow their refund claim because it was filed “more than three years after the tax return due date.” ECF No. 20-11 (Ex. NR-14). The Meinholds had until October 15, 2011 to file a claim regarding the 2007 taxable year. Id. The Second Amended Return was postmarked January 25, 2012. Id. The Meinholds subsequently filed an administrative appeal for reconsideration of their Second Amended Return. ECF No. 1 at ¶ 27. Around April 11, 2013, the IRS Brookhaven Office of Appeals denied the Meinholds’ administrative claim for reconsideration. Id. at ¶ 28. On March 14, 2014 the Meinholds filed this action against the government seeking a tax refund under 26 U.S.C. §§ 6511 and 7422 for $432, 070.00. Id. at ¶¶ 43–46.
The government moves for summary judgment arguing, among other things, that the Meinholds’ failure to file a timely administrative claim is dispositive.
II. STANDARD OF REVIEW
The Court may grant summary judgment if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must “designate specific facts showing that there is a genuine issue for trial.” Id. at 324. A fact is material “if under the substantive law it is essential to the proper disposition of the claim.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A material fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. “To defeat a motion for summary judgment, evidence, including testimony, must be based on more than mere speculation, conjecture, or surmise.” Bones v. Honeywell Int'l, Inc., 366 F.3d 869, 875 (10th Cir. 2004). The Court will examine the factual record and make reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Concrete Works of Colorado, Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).
Section 7422(a) of the Internal Revenue Code requires a taxpayer to file an administrative claim for refund before filing a tax refund suit. It provides:
No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.
26 U.S.C. § 7422(a). Filing a timely administrative claim with the IRS is considered “a jurisdictional prerequisite to maintaining a tax refund suit.” Angle v. United States, 996 F.2d 252, 253 (10th Cir. 1993). In order for the claim to be timely, it must “be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later[.]” 26 U.S.C. § 6511(a).
In the present case, the Meinholds paid their 2007 taxes when they submitted their return on October 15, 2008. ECF No. 1 at ¶ 8. They were therefore required to file an administrative claim for refund within three years-by October 15, 2011-as a jurisdictional prerequisite to bringing this suit. In response to the government’s argument that they failed to meet this requirement, the Meinholds claim that 1) they timely filed the Second Amended Return under the common law mailbox rule; 2) they timely filed the July Letter which constituted an informal claim for refund; and 3) the “mitigation provisions” of the Internal ...