Mascetta v. United States Department of Treasury
- Louis Stanton
- 1:20-cv-04810
- U.S. District Court · Southern District of New York
- 12
In Mascetta v. United States Department of Treasury, Judge Stanton dismissed the named agencies on immunity grounds but allowed amendment of a tax-refund claim against the United States.
Paul and Angela Mascetta, the Internal Revenue Service, the United States Department of the Treasury, the United States Attorney’s Office for the Southern District of New York, and the United States of America.
What happened
In Mascetta v. United States Department of Treasury, Paul and Angela Mascetta, representing themselves, challenged the Internal Revenue Service’s withholding of their 2019 joint tax refund and its forwarding to the United States Attorney’s Office. They argued that the government could no longer collect restitution from Paul Mascetta’s earlier criminal case because a 20-year limitation period had expired.
The court said the filing should be treated as a civil claim seeking recovery of money allegedly wrongfully collected under federal tax laws, rather than as a challenge to the earlier criminal case. The opinion stated that the Mascettas had not alleged that they first filed an administrative refund claim with the Internal Revenue Service, which is generally required before bringing this type of lawsuit.
Judge Louis L. Stanton dismissed the Internal Revenue Service, the Department of the Treasury, and the United States Attorney’s Office under the rule that federal agencies generally cannot be sued without the government’s consent. He granted the Mascettas leave to file an amended complaint against the United States alleging facts about any administrative refund claim, giving them 60 days to do so.
The detailed version
- Mascetta v. United States Department of Treasury · No. 1:20-cv-04810
- Louis Stanton
- Nov. 5, 2020
Background
Paul and Angela Mascetta, who were proceeding without lawyers, filed what they described as a petition seeking a writ of error coram nobis under 28 U.S.C. § 1651. The court treated the filing as a new civil action concerning Paul Mascetta’s closed criminal case and directed the petitioners either to pay the filing fee or apply to proceed without prepayment. They paid the filing fee.
The dispute concerned the Internal Revenue Service’s withholding of the Mascettas’ 2019 joint tax refund, stated in the opinion to be $3,061, and notifying them that it would be forwarded to the United States Attorney’s Office. Paul Mascetta had been convicted in 1999 of conspiracy to commit securities fraud and had been ordered to pay restitution. The petitioners argued that the government lacked authority to withhold the refund and apply it to restitution because a 20-year period for collecting restitution payments had expired. The opinion states that court records showed the last restitution payment was received on February 22, 2007.
Court’s analysis
The court explained that sovereign immunity generally prevents the United States from being sued without its consent and that this protection extends to federal agencies. Because the Internal Revenue Service, Department of the Treasury, and United States Attorney’s Office were federal agencies, and the United States had not consented to their being sued in this action, the court dismissed those entities under sovereign immunity.
The court identified 28 U.S.C. § 1346(a)(1) as a statute under which the United States has consented to certain suits seeking recovery of taxes or other sums allegedly wrongfully collected under federal tax laws. It also explained that 26 U.S.C. § 7422(a) generally requires a taxpayer to file an administrative claim for a refund or credit with the Treasury Secretary before bringing such a lawsuit. The opinion states that the petitioners did not allege facts showing that they had filed an administrative claim with the Internal Revenue Service.
Ruling and next steps
The court construed the submission as asserting a claim under 28 U.S.C. § 1346(a)(1) and granted the petitioners leave to file an amended complaint against the United States of America. The amended complaint must allege facts concerning exhaustion of an administrative refund claim. The petitioners were directed to submit it within 60 days, identify it as an amended complaint, and use docket number 20-CV-4810 (LLS). The court stated that no summons would issue at that time and that the action would be dismissed under § 1346(a)(1) if they failed to comply within the allowed period without showing good cause. Judge Louis L. Stanton did not decide the petitioners’ argument about the alleged 20-year restitution-collection limit in this order.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.