Refund Litigation: Think Before You Sue…Your Choice of Forum Matters

Pfizer, Inc. v. United States Choice of venue mattersDistrict courts and the Court of Federal Claims have concurrent jurisdiction over tax refund actions. Specifically, their jurisdiction reaches the following types of claims:

  • A civil action to recover “any internal-revenue tax alleged to have been erroneously or illegally assessed or collected”;
  • A civil action to recover “any penalty claimed to have been collected without authority”; or
  • A civil action to recover “any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws.”

28 U.S.C. § 1346(a)(1). Section 1346(a)(1) also serves as a waiver of sovereign immunity by the United States.… Read More

Half A Loaf Might Suffice: FBARs, Flora and Federal Jurisdiction

FBARJack Townsend’s excellent blog Tax Crimes covered an interesting case that involved an attempt to challenge a penalty under the Bank Secrecy Act (the “Act”), Kentera v. United States, No. 16-cv-1020-JPS, 2017 U.S. Dist. LEXIS 12450 (E.D. Wisc. Jan. 30, 2017). The Kenteras sought to challenge penalty assessments issued because they failed to file a Report of Foreign Bank and Financial Accounts, which is known as an FBAR, for several years. The FBAR reporting obligation is imposed under the Act. See 31 U.S.C. § 5314. The Kenteras were subjected to a series of penalty assessments for a series of violations; the largest penalty assessment for any year was $10,000, which is the ceiling for non-willful violations.… Read More

Tax Procedure: The Impact of Bankruptcy on Refund Claims

bankruptcy-tax-returnLast week, a district court addressed a series of refund claims that had an unusual jurisdictional complication: The Taxpayers initiated the refund claims while they were debtors in a Chapter 7 bankruptcy case, and the refunds they sought were property of the bankruptcy estate. The government sought to dismiss their refund action on a variety of grounds; while the motion was denied, the resulting opinion addresses a number of interesting issues concerning the complications that a bankruptcy case can add to a refund claim. Martin v. United States, No. 3:13-cv-03130, 2017 U.S. Dist. LEXIS 1285 (C.D. Ill. Jan. 5, 2017).… Read More