United States District Court, D. Massachusetts
HOFF STAUFFER, ADMINISTRATOR OF THE ESTATE OF CARLTON STAUFFER, Plaintiff,
INTERNAL REVENUE SERVICE, Defendant.
MEMORANDUM AND ORDER
April 26, 2013, Hoff Stauffer, as administrator of the estate
of his late father, Carlton Stauffer, (the
"Estate") sought a refund for overpaid taxes for
the year ending on December 31, 2006. The claim was submitted
past the October 15, 2010 deadline applicable under 26 U.S.C.
§6511. The Estate, however, submitted a statement by
Stauffer's treating psychologist alleging that Stauffer
had suffered from a "financial disability" that
justified suspension of the limitations period under 26
U.S.C. §6511(h)(2). The IRS nevertheless denied the
claim as untimely because the psychologist's letter did
not satisfy the requirement of Revenue Procedure 99-21 that a
person claiming financial disability submit a statement from
a "physician, " which is defined as a "doctor
of medicine or osteopathy" and excludes psychologists.
Estate sued. The IRS moved to dismiss, arguing that this
court lacks jurisdiction because the Estate did not properly
file its refund claim during the limitations period. On
February 24, 2017, the Magistrate Judge issued a report
recommending that the motion be denied because the IRS did
not justify its decision not to consider the statement from
Stauffer's psychologist as proof of his disability. For
the reasons explained below, the court is adopting in part
and modifying in part the Report and Recommendation, and the
motion to dismiss is being denied.
APPLICABLE LEGAL STANDARDS
Review of a Magistrate's Disposition
72(b)(3) of the Federal Rules of Civil Procedure requires the
court to review "de novo any part of the magistrate
judge's disposition that has been properly objected
to." "Conclusory objections that do not direct the
reviewing court to the issues in controversy" are not
proper under Rule 72(b). Velez-Padro v. Thermo King De
Puerto Rico, Inc., 465 F.3d 31, 32 (1st Cir. 2006).
Moreover, "[a party is] not entitled to a de novo review
of an argument never raised" before the magistrate
judge. Borden v. Sec'y of Health & Human
Servs., 836 F.2d 4, 6 (1st Cir. 1987). "Parties
must take before the magistrate, 'not only their best
shot but all of their shots.'" Id. (quoting
Singh v. Superintending Sch. Comm. of City of
Portland, 593 F.Supp. 1315, 1318 (D. Me. 1984).
of de novo review by failing to file proper objections does
not entitle a party to "some lesser standard" of
review. Thomas v. Arn, 474 U.S. 140, 149-50 (1985);
see also Costa v. Hall, 2010 WL 5018159, at *17 (D.
Mass. Dec.2, 2010) ("Absent objections, the court may
adopt the report and recommendation of the magistrate
judge."). However, review by the court in such
circumstances is not prohibited, and some level of oversight,
even if not de novo, is encouraged. See Henderson v.
Carlson, 812 F.2d 874, 878 (3rd Cir. 1987).
Motion to Dismiss for Lack of Jurisdiction
are two types of challenges to a court's subject matter
jurisdiction: facial challenges and factual challenges."
Torres-Negron v. J & N Records, LLC, 504 F.3d
151, 162 (1st Cir. 2007). "Facial attacks on a complaint
'require the court merely to look and see if the
plaintiff has sufficiently alleged a basis of subject matter
jurisdiction, and the allegations in [plaintiff's]
complaint are taken as true for purposes of the motion."
Id. However, when as in the case, the jurisdictional
issue depends on questions of fact, the court conducts one of
two inquiries. "[W]here...the jurisdictional issue and
substantive claims are so intertwined the resolution of the
jurisdictional question is dependent on factual issues going
to the merits, the district court should employ the standard
applicable to a motion for summary judgment."
Id. at 163. In contrast, when as in this case,
"the facts relevant to the jurisdictional inquiry are
not intertwined with the merits of the plaintiff's
claim...the trial court is free to weigh the evidence and
satisfy itself as to the existence of its power to hear the
settled principles of sovereign immunity, the United States,
as sovereign, is immune from suit, save as it consents to be
sued...and the terms of its consent to be sued in any court
define that court's jurisdiction to entertain the
suit." United States v. Palm, 494 U.S. 596, 608
(1990). 28 U.S.C. §1346(a) authorizes individuals to sue
for a refund of taxes "erroneously or illegally assessed
or collected...under the internal revenue laws."
However, the Internal Revenue Code establishes the terms of
the consent given in §134 6. Before suing, "the
taxpayer must comply with the tax refund scheme established
in the Code, " which provides that "a claim for a
refund must be filed with the Internal Revenue Service (IRS)
before suit can be brought, and establishes strict timeframes
for filing such a claim." United States v. Clintwood
Elkhorn Min. Co., 553 U.S. 1, 4 (2008).
particular, 26 U.S.C. §7422(a) specifies that:
No suit or proceeding shall be maintained in any court for
the recovery of any internal revenue tax alleged to have been
erroneously or illegally assessed or collected...until a
claim for refund or credit has been duly filed with the
[IRS], according to the provisions of law in that regard, and
the regulations of the Secretary [of the Treasury]
established in pursuance thereof.
C.I.R. v. Lundy, the court explained the time limits
for filing a claim for a refund with the IRS:
[26 U.S.C. §6511] contains two separate provisions for
determining the timeliness of a refund claim. It first
establishes a filing deadline: The taxpayer must
file a claim for a refund "within 3 years from the time
the return was filed or 2 years from the time the tax was
paid, whichever of such periods expires the later, or if no
return was filed by the taxpayer, within 2 years from the
time the tax was paid." §6511(b) (1) (incorporating
by reference §6511(a)).
516 U.S. 235, 239-40 (1996). As explained below, the Estate
filed its tax return for the year 2006 and its claim for a
refund on April 26, 2013. Therefore, the refund claim was
timely under section 6511(b)(1).
the statute also establishes a "look-back"
period. If the taxpayer files the refund claim within 3 years
from the time the return was filed, the taxpayer is entitled
to a refund only of the taxes he paid within the three years
(plus the period of any extension for filing the return)
before he filed the claim. See §6511(b) (2) (A)
[courts] should not construe such  time-bar provision[s]
unduly restrictively, [they] must be careful not to interpret
[them] in a manner that would extend the waiver [of sovereign
immunity] beyond that which Congress intended."
Palm, 494 U.S. at 608. Therefore, the Supreme Court
has held that "unless a claim for refund of a tax has
been filed within the time limits imposed by §6511(a), a
suit for refund...may not be maintained in any court."
Clintwood Elkhorn, 553 U.S. at 5. Accordingly,
courts may not "toll, for non-statutory equitable
reasons, the statutory time...limitations for filing tax
refund claims set for in [§6511]." United
States v. Brockamp, 519 U.S. 347, 348 (1997). Therefore,
absent some form of tolling, a claimant cannot, by filing a
claim in 2013, obtain a refund for taxes paid in 2006.
U.S.C. §6511(h) provides for statutory tolling of the
3-year limitations period in limited circumstances. In
particular, the time limit for submitting a claim to the IRS
"shall be suspended during any period of [an individual
taxpayer's] life that such individual is financially
disabled." 26 U.S.C. §6511(h)(1). An individual is
"financially disabled" if he is "unable to
manage his financial affairs by reason of a medically
determinable physical or mental impairment of the individual
which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not
less than 12 months." 26 U.S.C. §6511(h)(2)(A).
However, "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
Procedure 99-21 "sets forth in detail the 'form and
manner in which proof of financial disability must be
provided." Bova v. United States, 80 Fed. CI.
449, 455 (2008). It requires an individual claiming financial
disability to submit "a written statement by a
physician (as defined in §1861(r)(1) of the
Social Security Act, 42 U.S.C. §1395x(r)),
qualified to make the determination" that the individual
satisfied the definition of "financially disabled"
in 26 U.S.C. §6511(h). Rev. Proc. 22-91, §4
(emphasis added). Revenue Procedure 99-21 does not itself
define "physician" for the purposes of its
requirements. Instead, it refers to the definition as
established in §1861(r)(1) the Social Security Act, 42
U.S.C. §1395x(r) defines the term "physician"
as including five enumerated categories of professionals. The
first enumerated category, which corresponds to
§1861(r)(1) of the Social Security Act, is "a
doctor of medicine or osteopathy legally authorized to
practice medicine and surgery by the State in which he
performs such function or action (including
["osteopathic practitioners...within the scope of their
practice as defined by state law, " 42 U.S.C.
§1301(a) (7)])." The parties agree that this
definition excludes psychologists.
Revenue Procedure 99-21, incorporating 42 U.S.C.
§1395x(r), provides that a taxpayer seeking tolling of
the 3-year statute of limitations for filing a refund claim
based on a "financial disability" must submit a
letter from a qualified "doctor of medicine or
osteopathy legally authorized to practice medicine and
surgery, " to prove the taxpayer's disability.
court adopts the facts as recited in the Magistrate
Judge's Report and Recommendation and supplemented by the
record, which are undisputed. See R&R at 2-7.
October 29, 2012, Carlton Stauffer died at the age of 90. His
son, Hoff Stauffer, became the administrator of his estate.
While closing the Estate, Hoff Stauffer discovered that his
father had not filed tax returns for the tax years 2006
through 2012. Accordingly, on April 26, 2013, Hoff Stauffer
filed those returns with the IRS. Stauffer claimed that his
father overpaid taxes for the 2006 tax year in the amount of
$137, 403. He requested a refund for the Estate in that
February 18, 2014, the IRS denied the claim for a refund as
untimely pursuant to 26 U.S.C. §6511. Stauffer filed an
internal appeal. In it, he alleged that the IRS was required
to toll the statute of limitations, under 26 U.S.C.
§6511(h), because his father had been "financially
disabled" during the relevant period. In particular,
Stauffer submitted an April 9, 2014 certified statement from
Carlton's psychologist, Dr. Stanley Schneider, Ed.D., who
had treated him from 2001 until his death in 2012. Dr.
Schneider wrote that Carlton Stauffer suffered from
"psychological problems, " in addition to "a
variety of chronic ailments, including congestive heart
failure, chronic obstructive pulmonary disease, leukemia, and
chronic pneumonia." Objection, Ex. 2. These conditions,
he opined, "severely and negatively impacted"
Carlton Stauffer's "mental capacity, cognitive
functioning, decision making, and emotional well-being,
" and prevented him from managing his financial affairs
from at least 2006 until his death. Id.
on December 2, 2014, the IRS preliminary denied the
Estate's appeal and rejected its claim. The IRS did not
determine whether Carlton Stauffer was "financially
disabled" during the relevant period. Instead, the
agency stated that because Dr. Schneider was not a
"physician" as defined in Revenue Procedure 99-21,
his letter "cannot be used as a statement that can
certify Mr. Stauffer's condition." Compl. at