Ms. Barbeau claimed she was late in filing her returns because of domestic abuse.  The court describes her allegations:

Plaintiff’s Federal tax returns for the years 2012, 2013, and 2014 were filed late due to plaintiff’s severe mental and physical impairment from an abusive relationship she was in, causing her to have mental breakdowns, severe anxiety, panic attacks and illness. Plaintiff’s abuser hid her mail, including all mail from defendant [IRS].

In a later paragraph she further alleges that she filed the three late returns “[u]pon improvement of her situation.”

Assuming these allegations are true, the Court – and the IRS – treated this survivor of domestic abuse with utter callousness.

Ms. Barbeau filed her three late returns on April 16, 2019.  In October and November of 2019, in three separate notices, the IRS formally disallowed her refund claims.  She protested each of the notices of claim disallowance and included “partial physician notes regarding an April 29, 2012 emergency room visit, and a letter dated December 2, 2019 from an individual identified as a ‘training facilitator’.”

In dismissing her case, the court stated:

Plaintiff here failed to “strictly comply” with the requirements of Revenue Procedure 99-21 . Schmidt v. IRS, No. 20-2336, 2021 WL 4480718 (E.D. Cal. Sept. 30, 2021) (“To take advantage of this provision, a taxpayer must strictly comply with its requirements.”) (internal quotations and citations omitted), report and recommendation adopted sub nom. Schmidt v. United States, 2021 WL 5601327 (E.D. Cal. Nov. 30, 2021). Revenue Procedure 99-21 requires the statements described above “to be submitted with a claim.” Rev. Proc. 99-21 § 4 ; see also Schmidt, 2201 WL 4480718

(“As set forth, Rev. Proc. 99-21 requires that both the physician’s statement and the taxpayer’s statement be submitted with the taxpayer’s refund claim.”). Plaintiff filed her claim on April 12, 2019, but did not submit her own written statement until December 2, 2019, (Ex. E, FAC), and the physician’s statement until July 14, 2020. (Ex. B, FAC); see also Adams v. IRS, No. 13-04525, 2014 WL 457915 (C.D. Cal. Feb. 3, 2014) (“[P]laintiffs have not alleged a basis for the suspension of these limitations period because they allege they did not provide information regarding [the taxpayer’s] disability at the time they filed the claims.”). Moreover, Plaintiff cannot assert substantial compliance as “there [was] no physician statement whatsoever” at the time she filed her claim. See Reilly v. United States, No. 14-07936, 2015 WL 5305210 (C.D. Cal. Sept. 10, 2015). Accordingly, as Plaintiff’s claim is not tolled, the three-year limitation is a jurisdictional bar to her refund claim. The Court thus GRANTS Defendant’s Motion to dismiss Plaintiff’s refund claim.

The irony in the IRS’s position in this case is that the IRS is well aware of the multitudinous challenges survivors of domestic abuse must face as they find stability. This is revealed in Rev. Proc. 2013-34, which contains a robust definition of domestic abuse, and which was developed with public input through notice and comment, as well as with strident advocacy by the former National Taxpayer Advocate. The Rev. Proc.’s definition of abuse mirrors the evidence Ms. Barbeau began to obtain: “Abuse comes in many forms and can include physical, psychological, sexual, or emotional abuse, including efforts to control, isolate, humiliate, and intimidate the requesting spouse, or to undermine the requesting spouse’s ability to reason independently and be able to do what is required under the tax laws.”

Leaving this Rev. Proc aside, the Tax Court has also instructed the IRS on myriad ways in which abuse affects taxpayers. In Nihiser v. Commissioner, T.C. Memo. 2008-135, the Tax Court held that “psychological mistreatment in the absence of physical harm [can] be “abuse.”” Psychological abuse (mental, emotional, verbal) can impact someone in a similar manner to physical abuse. Accordingly, the Tax Court noted in Stephenson v. Commissioner  “that requiring petitioner to inquire into whether [their spouse] reported on the return the income she earned could have put her at risk of abuse. Petitioner’s efforts to become more informed of what she was signing and questions about their finances in general resulted in threats of violence or verbal abuse from [their spouse].” Moreover, the Tax Court in Drayer v. Commissioner explained that abuse impacts each taxpayer differently but can include, among other things, social isolation, exhaustion, humiliation, demoralization, forced use of drugs or alcohol and the degradation of “the victim’s ability to reason independently.”

Shame on the IRS for not opening the door wider for taxpayers such as Ms. Barbeau. Its litigating position in her case lays bare the agency’s insensitivity to taxpayers whose lives are complicated and painful through no fault of their own, and yet who endeavor to be compliant.

Again, I call on the IRS to give the public the right to comment on Rev. Proc. 99-21.  In the quarter century since the passage of IRC 6511(h) giving individuals with financial disability the right to file a late claim under certain circumstances, the IRS has never issued regulations and has never engaged with the public regarding how it might administer the claims of this class of individuals.

Again, I suggest that the IRS establish a unit to facilitate claims of individuals claiming financial disability. Shielding itself behind procedural mechanisms denies taxpayers the chance to pursue their claim and thwarts the statute’s purpose.

Again, I wonder how many pro se taxpayers’ claims are denied merely because they were not attuned to a revenue procedure when they filed their claim.

The court writes the opinion here in response to Mr. Ruebsamen’s motion for reconsideration of the dismissal of complaint seeking a refund for 2011 and 2012.  The court grants his motion for reconsideration, vacates its prior dismissal of his case and then dismisses his case for failure to state a claim.  Not exactly the result he was hoping for in filing the motion for reconsideration.

He timely filed his 2011 (assuming he had an extension of time to file) and 2012 returns fully paying the reported liability.  On October 10, 2017, more than four years after filing the 2012 return, he filed amended returns seeking modest refunds.  The IRS denied the claims because they were filed too late.

He filed suit almost exactly two years after the notices of claim disallowance and, a month after filing suit, filed with the Court of Federal Claims a signed physician’s statement.

The IRS moved to dismiss the case because he did not qualify for the financial disability exception making his claims out of time.  He argued that he qualified because he submitted the proof of his disability in the submission to the court a copy of which he provided to the IRS.  The IRS argues that he fails to qualify “because [plaintiff did not provide the [IRS] with the required proof of disability.”

When Mr. Ruebsamen filed his motion for reconsideration he also filed an updated version of the doctor’s note he had submitted earlier.  He argued that he did not need to submit the doctor’s note to the IRS with the claim in order to qualify for financial disability relief.  The IRS argues that pursuant to Rev. Proc. 99-21 the supporting documentation for his claim of financial disability needed to be submitted to the IRS with the claim.

In analyzing the case the court discusses the evolution of the law resulting from the case of Brown v. United States, — F.3d – (Fed. Cir. 2022), affirming on different grounds, 151 Fed. Cl. 530 (2020) a case on which we have blogged about previously here and here (discussing Brown but focusing on Dixon v. United States discussed further below) and a case on which the tax clinic at Harvard filed an amicus brief on behalf of the Center for Taxpayer Rights  in support of the conclusion that the court had jurisdiction.  The lower court decision in Brown was decided by Judge Smith who is the same judge deciding the Ruebsamen case.  So, it’s not surprising that he discusses the changing jurisdictional rules brought about by Brown but also focuses again on the duly filed language of IRC 7422(a).

In discussing the Brown case, Judge Smith notes that Brown decided a refund claim filed without proper signature did not deprive the court of jurisdiction but then dismissed the case for failure to state a claim because the claim was defective.  He follows that path here as he reverses his earlier dismissal for lack of jurisdiction.

In discussing the “duly filed” requirement of IRC 7422(a) the court cites to the case of Dixon v. United States, 158 Fed. Cl. 69, 77-78 (2022) (see blog site linked above).  Similar to Brown and a series of cases, Dixon filed a claim signed by the CPA rather than the taxpayer.  That claim was denied; however, after the expiration of the statute of limitations for filing a claim for the year at issue, Dixon filed a properly signed claim arguing that the newly filed claim supplemented the earlier informal claim.  The Court of Federal Claims denied the informal claim argument.  The case is now on appeal to the Federal Circuit.  The tax clinics at Harvard and Temple joined together to file an amicus brief in the Dixon case on behalf of the Center for Taxpayer Rights as well.

Following the logic of Brown, as supplemented by Dixon, the court dismisses Mr. Ruebsamen’s case for failure to state a claim.

The court finds that allowing Mr. Ruebsamen to submit the evidence of his disability to the court without having submitted it at the time of filing his claim for refund would improperly circumvent Rev. Proc. 99-21 citing to the case of Estate of Rubinstein v. United States, 96 Fed. Cl. 640, 652 (2011) (requiring strict compliance with the Rev. Proc.)

I am troubled by this outcome for various reasons.  The cases raise concerns about the informal claim doctrine similar to the concerns raised in the Dixon cases and now being argued on appeal in the Federal Circuit.  The case also raises concerns about the interplay of the informal claims doctrine and 6511(h).  Mr. Ruebsamen does not appear to have argued that the informal claim doctrine should be at play.  Could he now send another claim to the IRS with the information sought by Rev. Proc. 99-21 which would be late again but which would supplement his timely claim now being dismissed?  That could put him more squarely in the situation facing plaintiff in the Dixon case.

One problem here for financial disability claimants seeking to file their claim pro se will almost never know the requirements of Rev. Proc. 99-21.  If in their initial claim they fail to include all of the information the IRS wants, will their cases be automatically dismissed for failure to state a claim because they were not duly filed?  This outcome seems unduly harsh.

We know nothing about the merits of his claim for financial disability and what caused him to file the initial claim late.  Very often in these cases the issue causing the financial disability also makes it challenging for these taxpayers to put together a claim that meets the rigors of Rev. Proc. 99-21.  I would like to see less deference to the almost 25 year old Rev. Proc. on which the public has never been allowed to comment and more effort to look at the underlying issue and try to help taxpayers who have a legitimate basis for filing late. 

IRM 25.6.1.10.2.9.1 (4) provides with respect to claims for financial disability that:

Proof of the medically-determined impairment must be submitted with the taxpayer’s claim for credit or refund of tax.

A. A written statement from the person signing the claim for credit or refund that no person, including the taxpayer’s spouse, was authorized to act on behalf of the taxpayer during the period the taxpayer was prevented from managing his/her financial affairs.

B. A written statement from a medical physician, must name and describe the mental or physical impairment, give a medical opinion that the impairment prevented the taxpayer from managing his or her financial affairs, give a medical opinion that the impairment has had, or is expected to have, one of the effects described in (2)(b), above, state, to the best of the physician’s knowledge, the period during which the taxpayer was prevented from managing his or her financial affairs, and include a signed certification that to the best of the physician’s knowledge and belief, the above representations are true, correct, and complete.

Congress gave discretion to the IRS in IRC 6511(h) to dictate the form and manner of the claim:

An individual shall not be considered to have such an impairment unless proof of the existence thereof is furnished in such form and manner as the Secretary may require.

The ability to require the form and manner of the claim does not mean that the IRS must ignore comments on how to establish a form and manner that will work for a vulnerable population.  Taxpayers legitimately claiming financial disability relief will often have difficulty expressing themselves, much less meeting the other criteria the IRS has established for relief.  While the IRS has legitimate needs for a claim with the type of information it can appropriately consider in deciding whether to grant relief, this population of taxpayers also has needs that should be taken into account in drafting a reasonable process.  The Taxpayer Advocate Service suggested reforms to IRC § 6511 in its 2013 and 2021 annual report.  To restore the Congressional purpose in passing financial disability relief, it’s time to amend the statute striking down the inappropriate Rev. Proc. and establishing a system that will allow appropriate individuals the opportunity to file claims past the normal deadline.

This should not be a game of gotcha for a population of individuals who otherwise meet the criteria for relief.