Chenette v. United States

Background

Susanna Chenette sued the United States under 26 U.S.C. § 7422 seeking a refund of taxes she paid in connection with 2012 stock sales. The United States did not dispute that Chenette overpaid her taxes, but moved to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). It argued that Chenette’s October 14, 2014 remittance was a payment, so the two-year deadline for filing an administrative refund claim expired on October 14, 2016. Chenette filed her formal claim using a Form 1040X in November 2016.

Chenette argued that her October 2014 letter to the Internal Revenue Service was an informal refund claim filed before the deadline. She said the letter explained her tax calculations, challenged the proposed assessment, included supporting information, and accompanied her remittance. She argued that the informal claim, followed by the later formal claim, made the action timely. She also argued that the court should not resolve disputed facts about the remittance at the motion-to-dismiss stage.

Analysis

The court explained that a taxpayer generally must file a timely administrative refund claim before bringing a refund action. Under the informal claim doctrine, a submission with technical defects can preserve a refund claim if it is filed within the statutory period and is later followed by a valid formal claim.

The court found that Chenette’s October 2014 letter qualified as an informal claim. The letter identified the tax year, gave a detailed explanation of why Chenette disagreed with the proposed additions to her income-tax liability, and was signed under penalty of perjury. The United States did not identify a deficiency in the letter or argue that it lacked enough information to notify the Internal Revenue Service of the nature of Chenette’s claim.

The court also noted that the October 2014 letter contained substantially the same information as Chenette’s later Form 1040X. The Internal Revenue Service treated the Form 1040X as a refund claim and later issued a notice stating that Chenette was entitled to a refund, which further supported the court’s conclusion that the earlier submission gave the agency enough information to investigate the dispute.

Because the court concluded that Chenette’s informal claim was timely, it did not decide whether the October 2014 remittance was a payment that started the two-year limitations period or a deposit that did not. The court therefore concluded that it had subject-matter jurisdiction over the action.

Disposition

Judge Joseph C. Spero denied the United States’ motion to dismiss. The court also vacated the October 25, 2019 motion hearing, while leaving the case-management conference on the calendar at a different time.