Gonzalez v. Department of the Treasury Internal Revenue Service

Background

Ilonka and Juan Gonzalez, a married couple filing joint tax returns, represented themselves in this action against the Department of the Treasury and Internal Revenue Service. Ilonka Gonzalez alleged that the Internal Revenue Service incorrectly attributed approximately $72,000 of personal income to her and her husband in 2011 rather than to “her” corporation. She alleged that the Internal Revenue Service then applied their yearly tax refunds toward the assessment, but that she could not determine how the refunds had been applied. The complaint sought the return of refunds dating to 2012.

The United States moved to dismiss for lack of subject-matter jurisdiction, arguing that the taxpayers had not paid the assessment in full before suing and had not exhausted their administrative remedies. The United States also argued that it, rather than the Department of the Treasury and Internal Revenue Service, was the proper defendant. Alternatively, it moved to transfer the case to the Southern District of New York. The Gonzalezes did not respond to the motion.

Subject-matter jurisdiction

The court explained that federal law permits certain actions against the United States to recover taxes allegedly assessed or collected unlawfully, but that the waiver of the United States’ immunity from suit is conditional. The taxpayer generally must pay the full assessment before challenging it in a civil action. A taxpayer seeking a refund must also file an administrative claim with the Internal Revenue Service and generally wait six months, unless the agency decides the claim sooner.

The court could not determine from the unclear complaint which statutory basis the Gonzalezes relied on or whether they had paid the assessment and completed the required administrative procedures. Because the allegations were made by people representing themselves, the court read them generously. It therefore declined to dismiss the complaint for lack of subject-matter jurisdiction on the existing record. The court also stated that, even if the United States’ jurisdiction arguments were accepted, it would allow the Gonzalezes an opportunity to correct pleading deficiencies rather than dismissing at that stage.

Venue and disposition

Venue is the legally proper federal district for the case. Under 28 U.S.C. § 1402(a), an action against the United States under the cited tax jurisdiction statute may be brought only in the judicial district where the taxpayer resides. The opinion states that the Gonzalezes reside in Tappan, New York, in Rockland County, which lies in the Southern District of New York. It also states that the events alleged occurred in the Bronx, which is within that district.

The Eastern District of Pennsylvania therefore concluded that venue was improper there. Applying 28 U.S.C. § 1406(a), the court granted the United States’ motion in part and transferred the action to the United States District Court for the Southern District of New York. The court did not grant the request to dismiss for lack of subject-matter jurisdiction.

Note on the supplied metadata

The opinion text identifies the court as the Eastern District of Pennsylvania and is signed “KEARNEY, J.” The supplied metadata identifies the Southern District of New York and Judge Sarah Netburn. This summary follows the opinion text and flags the conflict for review.