Subbiah v. IRS

Background

Subramanian Subbiah and Donna Chu, who were proceeding without lawyers, sued the Internal Revenue Service seeking payment of their 2014 tax refund. The IRS moved to dismiss the complaint on two grounds.

The IRS’s arguments

First, under Federal Rule of Civil Procedure 12(b)(1), which concerns the court’s subject-matter jurisdiction, the IRS argued that the complaint was filed one business day late. The court stated that the record showed the complaint was filed in person and received on January 21, 2022, which was within the pertinent two-year period.

Second, under Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim for relief, the IRS argued that the plaintiffs filed their administrative refund claim too late under 26 U.S.C. § 6511(a). The plaintiffs conceded that they did not seek repayment of the 2014 refund within the statute’s usual three-year period. They argued, however, that an exception for financial disability applied. They said Subbiah was incapacitated by severe ill health and Chu was incapacitated by her lack of knowledge about the couple’s finances, along with financial and time constraints. Under the cited statute, qualifying financial disability can suspend the deadline.

Ruling

The court found that the plaintiffs had provided sufficient grounds for possible relief when the complaint was viewed in their favor. The court expressly stated that it was not deciding the merits of their claims at this stage. It therefore denied the IRS’s motion to dismiss. The court also vacated the scheduled July 29, 2022 hearing and set an initial case-management conference for September 23, 2022, with case-management statement deadlines described in the order.