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Houghmaster v. United States

United States District Court, N.D. New York

January 15, 2020

GARY HOUGHMASTER, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.

          SYRACUSE UNIVERSITY COLLEGE OF LAW OFFICE OF CLINICAL LEGAL EDUCATION ROBERT G. NASSAU, ESQ. Attorneys for Plaintiff

          U.S. DEPARTMENT OF JUSTICE TAX DIVISION ARIE M. RUBENSTEIN, ESQ. Attorneys for Defendant SCULLIN, Senior Judge

          MEMORANDUM-DECISION AND ORDER

          FREDERICK J. SCULLIN, JR. SENIOR UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Gary Houghmaster (“Plaintiff”) brings this action against the United States of America (“Defendant”) seeking a refund in the amount of $13, 165.89 that he claims was wrongly withheld from his taxes. See generally Dkt. No. 1, Complaint. Defendant has moved to dismiss some of the claims in the complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. See generally Dkt. No. 11. Specifically, Defendant has moved to dismiss (1) Plaintiff's claim for a $5, 006.00 refund from the 2012 tax year, and (2) Plaintiff's claim for a $4, 466.00 earned income credit from the 2015 tax year.[1] See generally Dkts. No. 11, 14.

         II. BACKGROUND

         Plaintiff alleges that he timely filed his 2012 federal income tax return (Form 1040) (the “Original 2012 Return”) by April 15, 2013. In that return, Plaintiff reported income tax liability of $0 and self-employment tax liability of $1, 885. Plaintiff also claimed an earned income credit of $5, 891 and an additional child tax credit of $1, 000. Therefore, Plaintiff's Original 2012 Return claimed a refund of $5, 006 ($6, 891 refundable credits, less 1, 885 in self-employment tax), which he never received.

         The Internal Revenue Service (“IRS”) audited Plaintiff after he filed his Original 2012 Return. On November 25, 2013, the IRS assessed that Plaintiff owed a tax liability on his 2012 return and denied Plaintiff's claim for a refund. On March 10, 2014, the IRS applied $79.62 of Plaintiff's 2013 income tax refund against his outstanding 2012 tax liability. The next year, on February 16, 2015, the IRS applied $3, 189.89 of Plaintiff's 2014 income tax refund against his outstanding tax liability. These payments, totaling $3, 269.51, satisfied all of Plaintiff's tax liability for 2012, including penalties and interest.

         On February 8, 2017, Plaintiff filed an Amended U.S. Individual Income Tax Return for 2012 using Form 1040X (“Amended 2012 Return”).[2] Plaintiff's Amended 2012 Return averred that his Original 2012 Return was correct as filed; and, therefore, he sought a refund of $8, 275.51 ($5, 006 claimed on his Original 2012 Return, plus $3, 269.51 paid in 2012 tax liability). The IRS denied Plaintiff's claim for a refund on July 25, 2017.

         Additionally, Plaintiff alleges that he timely filed his federal income tax return (Form 1040) for the 2015 calendar year. In that return, he claimed an income tax liability of $0, a $4, 466 earned income credit, and a $1, 039 additional child tax credit. Based on these credits and liabilities, and as a result of $36 of income tax withholding, Plaintiff's 2015 Return claimed a refund of $5, 541, which he never received. Subsequent to filing his 2015 Return, the IRS audited Plaintiff's return and proposed to disallow his dependency exemptions, earned income credit, and additional child tax credit.

         Based on these allegations, Plaintiff filed the complaint in this action on December 8, 2017, pursuant to the Internal Revenue Code, to recover federal income taxes paid for the 2012 and 2015 calendar years. See generally Dkt. No. 1.

         III. DISCUSSION

         A. Legal standards

         “A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Fed.R.Civ.P. 12(b)(1)). “A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Id. (citing Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996)). “Indeed, a challenge to the jurisdictional elements of a plaintiff's claim allows the Court ‘to weigh the evidence and satisfy itself as to the existence of its power to hear the ...


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