Is the Requirement to File a Refund Claim Before Bringing Suit Waivable?

Section 7422(a) requires that a taxpayer bringing a suit for refund first file with the IRS an administrative claim for refund. In United States v. Dalm, 494 U.S. 596, 601-602, 608 (1990), the Supreme Court stated that both the filing of an administrative claim and the timely filing of such claim were jurisdictional requirements of a refund suit. Jurisdictional requirements cannot be waived by the parties or forfeited if a party fails to timely object.

Dalm was decided before the Supreme Court changed its thinking on what conditions of suits are jurisdictional. Since 2004, the case law (which we have discussed in many previous posts) is that “claims processing rules” are generally no longer jurisdictional. There are only two exceptions to this rule. First, Congress can make a claims processing rule jurisdictional by making a clear statement in the statute to that effect. Second, if there is a long line of Supreme Court cases holding the claims processing rule jurisdictional, then the Court will stick to that interpretation under stare decisis.

Dalm was the first and only Supreme Court opinion calling the requirement to file a predicate administrative refund claim jurisdictional, so it seems unlikely that the stare decisis exception would apply. And, section 7422(a) does not contain the word “jurisdiction” or appear to speak in jurisdictional terms. Rather, the jurisdictional grant for refund suits is located elsewhere – at 28 U.S.C. sec. 1346(a)(1). The Supreme Court has held that the separation of a claims processing rule from a jurisdictional grant is evidence that Congress did not intend a claims processing rule to be jurisdictional.

In dicta a few years ago, the Seventh Circuit speculated that the requirement to file an administrative tax refund claim before bringing a tax refund suit might no longer be jurisdictional. It wrote:

The Gillespies do not respond to the government’s renewed argument that § 7422(a) is jurisdictional, though we note that the Supreme Court’s most recent discussion of § 7422(a) does not describe it in this manner, see United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4-5, 11-12 (2008). And other recent decisions by the Court construe similar prerequisites as claims-processing rules rather than jurisdictional requirements, see, e.g., United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632-33 (2015) (concluding that administrative exhaustion requirement of Federal Tort Claims Act is not jurisdictional); Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 157 (2010) (concluding that Copyright Act’s registration requirement is not jurisdictional); Arbaugh v. Y & H Corp., 546 U.S. 500, 504 (2006) (concluding that statutory minimum of 50 workers for employer to be subject to Title VII of Civil Rights Act of 1964 is not jurisdictional). These developments may cast doubt on the line of cases suggesting that § 7422(a) is jurisdictional. See, e.g., United States v. Dalm, 494 U.S. 596, 601-02 (1990); Greene-Thapedi v. United States, 549 F.3d 530, 532-33 (7^th Cir. 2008); Nick’s Cigarette City, Inc. v. United States, 531 F.3d 516, 520-21 (7^th Cir. 2008).

Gillespie v. United States, 670 Fed. Appx. 393, 394-395 (7^th Cir. 2016).

Title VII of the Civil Rights Act provides for private causes of action arising out of employment discrimination and gives federal courts subject matter jurisdiction to resolve such disputes. See 42 U.S.C. § 2000e-5(f). Before seeking judicial relief, however, Title VII plaintiffs are required to exhaust their administrative remedies by filing a charge of discrimination with the Equal Employment Opportunity Commission within 180 days of the alleged discrimination. 42 U.S.C. § 2000e-5(e)(1).

The Circuit courts are badly split over whether the exhaustion of administrative remedies requirement in Title VII is jurisdictional or merely a nonjurisdictional claim processing rule subject to waiver, forfeiture, estoppel, and equitable tolling. By the count of the Fifth Circuit in Davis, three Circuits take the position that the administrative filing requirement is jurisdictional, while eight (including the Fifth Circuit in Davis) find it a waivable nonjurisdictional claims processing rule.

In holding that the exhaustion requirement was not jurisdictional, the Fifth Circuit in Davis relied heavily on the Arbaugh case (cited in the above quote from Gillespie). It wrote: “Title VII’s administrative exhaustion requirement is not expressed in jurisdictional terms in the statute, see 42 U.S.C. § 2000e-5, and just as in Arbaugh, there is nothing in the statute to suggest that Congress intended for this requirement to be jurisdictional.” Davis, 893 F.3d at 306.

But for the complicating existence of the Dalm opinion, it is hard to imagine that if the Supreme Court holds the Title VII administrative exhaustion requirement nonjurisdictional (as most Circuits have), that § 7422(a)’s tax refund claim filing requirement could still be held jurisdictional.