United States District Court, E.D. Washington
PHILIP A. DUGGAN, Plaintiff,
UNITED STATES OF AMERICA, Defendant.
ORDER GRANTING UNITED STATES OF AMERICA'S
SUGGESTION OF LACK OF SUBJECT MATTER JURISDICTION WITH
RESPECT TO COUNTS 1 AND 2 OF THE COMPLAINT
SALVADOR MENDOZA, JR., United States District Judge
the Court, without oral argument, is Defendant United States
of America's Suggestion of Lack of Subject Matter
Jurisdiction with Respect to Counts 1 and 2 of the Complaint.
ECF No. 43. Through this motion, the United States seeks
dismissal of counts one and two of the complaint because it
asserts the Court does not have subject-matter jurisdiction
to hear these claims. Plaintiff Duggan opposes the motion
arguing that subject-matter jurisdiction exists. ECF No. 44.
Having reviewed the pleadings and the file in this matter,
the Court is fully informed and grants the motion.
Duggan alleges that, pursuant to 26 U.S.C. §6702, the
Internal Revenue Service (IRS) incorrectly assessed and
imposed penalties against him for filing frivolous tax
submissions. ECF No. 1 at 3. He filed suit asking “for
reallocation and then, if applicable, refund of taxes taken
through levy and erroneously applied to defective, improperly
or otherwise unjustly assessed penalties.” ECF No. 1 at
1. Duggan's complaint lists thirteen separate counts
identifying payments he made toward penalties he asserts were
incorrectly assessed and imposed against him. Id. at
18-35. Following a previous motion to dismiss filed by the
United States, ECF No. 6, the Court dismissed counts eight
through thirteen because the Court lacked subject-matter
jurisdiction over those claims. ECF No. 22. Counts one
through seven remain. ECF No. 1 at 18-26.
present motion only challenges the Court's subject-matter
jurisdiction over counts one and two. ECF No. 43 at 1-2, 8 n.
3. Counts one and two concern penalties Duggan paid in 2012
through levies on his monthly retirement distribution for tax
years 1998 and 1999, respectively. ECF No. 1 at 1-2.
Federal courts must ensure they possess subject-matter
the court determines at any time that it lacks subject-matter
jurisdiction, the court must dismiss the action.”
Fed.R.Civ.P. 12(h)(3). A party asserting this defense can do
so by filing a motion under Federal Rule of Civil Procedure
12(b)(1). However, a motion made pursuant to Rule 12(b)
“must be made before pleading if a responsive pleading
is allowed.” Courts are split regarding the proper
vehicle for challenging a court's subject-matter
jurisdiction after a responsive pleading is filed.
Weirich v. Bd. of Governors of the Fed. Reserve
Sys., No. CV-10-5031, 2010 WL 4641959, at *3 (E.D. Wash.
Nov. 2, 2010) (identifying a split in authority as to whether
a motion filed pursuant to Rule 12(b)(1) after an answer has
been filed is the appropriate way to challenge a court's
courts must consider challenges to their subject-matter
jurisdiction at any time and dismiss matters not properly
before them. Arbaugh v. Y&H Corp., 546 U.S. 500,
500 (2006) (“The objection that a federal court lacks
subject-matter jurisdiction . . . may be raised at any
stage in the litigation, even after trial and the entry
of judgment, Rule 12(h)(3).”) (emphasis added);
Augustine v. United States, 704 F.2d 1074, 1077 (9th
Cir. 1983) (“The defense of lack of subject matter
jurisdiction cannot be waived, and the court is under a
continuing duty to dismiss an action whenever it appears that
the court lacks jurisdiction.”). Accordingly, a motion
challenging a court's subject-matter jurisdiction
pursuant to Rule 12(h)(3) is proper. Weirich, 2010
WL 4641959 at *3 (concluding that a motion under Rule
12(h)(3) is proper); Elvig v. Calvin Presbyterian
Church, 375 F.3d 951, 955 n. 2 (9th Cir. 2004) (citing
Augustine, 704 F.2d at 1075 n. 3) (“The matter
of subject matter jurisdiction . . . may be raised by the
parties at any time.”); Berkshire Fashions, Inc. v.
M.V. Hakusan II, 954 F.2d 874, 879 n. 3 (3d Cir. 1992)
(“The distinction between a Rule 12(h)(3) motion and a
Rule 12(b)(1) motion is simply that the former may be
asserted at any time and need not be responsive to any
pleading of the other party.”); Cruz v. AAA Carting
and Rubbish Removal, Inc., 116 F.Supp.3d 232, 239
(S.D.N.Y. July 16, 2015) (“[T]he difference between a
motion made under Rule 12(b)(1) and one made under Rule
12(h)(3) is largely academic, and the same standards are
applicable to both types of motions.”) (citation and
quotation marks omitted).
the present motion is properly before the Court under Rule
Establishing subject-matter jurisdiction in tax refund
courts can assert subject-matter jurisdiction in an action
against the United States when sovereign immunity has been
waived and a statute has vested them with such jurisdiction.
Alvarado v. Table Mountain Rancheria, 509 F.3d 1008
(9th Cir. 2007) (citing Arford v. United States, 934
F.2d 229, 231 (9th Cir. 1991).
tax refund suits in particular, “a taxpayer must pay
the entire tax or penalty it seeks to recover from the IRS in
order for the district court to have jurisdiction.”
Flora v. United States, 362 U.S. 145 (1960).
“Ordinarily, there is no jurisdiction in the district
courts over suits for the refund of penalty amounts paid
until the taxpayer has paid the full amount of the contested
penalty assessment . . . and has filed a claim for refund
which the IRS has either rejected or not acted upon in six
months.” Thomas v. United States, 755 F.2d 728
(9th Cir. 1985) (citations omitted). Moreover, no lawsuit or
proceeding can continue for the “recovery of any . . .
penalty claimed to have been collected without authority, or
of any sum alleged to have been excessive or in any manner
wrongfully collected, until a claim for refund or credit has
been” filed with the Secretary of the Treasury or his
delegate. 26 U.S.C. §§7422(a) and 7701. A claim for
refund must be filed “within 3 years from the time of
the return was filed or 2 years from the time the tax was
paid, ” whichever is later. 26 U.S.C. §6511(a).