Austin v. Internal Revenue Service

Background

George Jarvis Austin’s second amended complaint alleged that the Internal Revenue Service had not paid him a $6,160 refund for his 2019 taxes and had not paid him a $1,400 stimulus payment in 2021. Austin alleged that he properly filed his tax return, satisfied the administrative requirements for the 2019 refund, contacted the IRS about the missing stimulus payment by telephone and in writing, and sent a demand letter.

The opinion states that the proper defendant for a refund claim under 26 U.S.C. § 7422 is the United States, not the IRS. It also explains that the American Rescue Plan Act of 2021 provided eligible individuals with advance refunds of tax credits of up to $1,400. People who did not receive the advance credit could seek it by filing a tax return.

Austin’s Motions for Judgment

Austin filed two substantially similar motions asking for judgment in his favor, arguing that the defendant had not presented an effective defense to his allegations. Because discovery had not begun, the court construed the motions as requests for judgment on the pleadings under Federal Rule of Civil Procedure 12(c).

The court held that the motions were premature. The pleadings had not closed because the IRS’s motion to dismiss tolled the time for filing an answer to the complaint. The court therefore denied both motions.

IRS Motion to Dismiss

The IRS moved to dismiss the claim concerning the $1,400 stimulus payment under Federal Rule of Civil Procedure 12(b)(1), which allows dismissal when the court lacks subject-matter jurisdiction. The IRS argued that Austin had not shown a waiver of the United States’ sovereign immunity. Sovereign immunity generally protects the United States from being sued unless it clearly agrees to the lawsuit.

The court explained that Congress waived sovereign immunity for certain tax-refund suits, but that a person seeking a refund must first file an administrative claim with the IRS and satisfy statutory timing requirements. Under 26 U.S.C. § 6532, a person generally cannot bring the refund suit until six months after filing the administrative claim.

The court treated Austin’s stimulus-payment claim as a tax-refund claim despite its different name. Austin alleged that he had contacted the IRS and sent a demand letter, but he did not provide enough information about what claims he submitted or when he submitted them. The court also agreed that, based on the allegations, it appeared impossible for six months to have passed between the earliest possible administrative claim for the stimulus payment and the filing of Austin’s amended complaint on March 2, 2022.

The court concluded that Austin had not plausibly alleged that he satisfied the requirements for the statutory waiver of sovereign immunity. It granted the IRS’s motion to dismiss with leave to amend. The court did not state that the claim was dismissed with prejudice. Instead, it allowed Austin to file a new complaint by September 16, 2022, and warned that the stimulus-payment claim might be dismissed with prejudice if he did not do so.

Ruling and Effect

Judge Haywood S. Gilliam, Jr. denied Austin’s two motions for judgment and granted with leave to amend the IRS’s motion to dismiss the stimulus-payment claim. The court instructed Austin to plead specific facts, including how he satisfied the six-month requirement, and reminded him that the United States—not the IRS—is the proper defendant for a claim under 26 U.S.C. § 7422.