United States Court of Appeals for the Federal Circuit
November 5, 1999
GEORGE M. BROWN, PLAINTIFF-APPELLANT,
UNITED STATES, DEFENDANT-APPELLEE
Before Mayer, Chief Judge, Newman and Rader, Circuit Judges.
The opinion of the court was delivered by: Newman, Circuit Judge
NOTE: Pursuant to Fed. Cir. 47.6, this Disposition is not citable as precedent. It is a public record. The Disposition will appear in tables published periodically.
George M. Brown appeals the final judgment of the United States Court of Federal Claims, dismissing two counts of his three count complaint, George M. Brown v. United States, 36 Fed. Cl. 290 (1996), and granting the government's motion for summary judgment on the remaining count. George M. Brown v. United States, 43 Fed. Cl. 463 (1999), as amended, No. 94-257T (Fed. Cl. Mar. 11, 1999). The judgment is affirmed.
Taxpayer Brown filed his 1990 federal income tax return on April 15, 1991. This return reported trust beneficiary and royalty income, upon which Mr. Brown calculated an income tax liability of $21,438. No payment accompanied the return, and no estimated tax payments had been made. Although Mr. Brown included a Form 6251 (Alternative Minimum Tax--Individual), several lines of the form were not completed, including the line for the minimum alternative tax. This form was read by the IRS as reporting a minimum alternative tax of zero, and on this basis Mr. Brown=s income tax liability was recalculated by the IRS as $48,226.98. To this amount the IRS added a penalty of $960.04 for failure to pay estimated tax, a penalty of $214.37 for failure to pay tax, and interest of $558.07 as of May 27, 1991, the date the return was processed.
Mr. Brown filed an amended return on July 17, 1991. The amended return again included an incomplete Form 6251. The IRS recalculated Mr. Brown=s tax, and informed him on August 27, 1991 that his total liability at that time, including penalties and interest, was $48,257.15.
Between June 3, 1991 and December 5, 1991 Mr. Brown made seventeen $100 payments. On December 6, 1991 the IRS filed notice of federal tax liens. Ten days later Mr. Brown filed a second amended return showing a 1990 tax liability of $25,453. Included with the second amended return were a fully completed Form 6251 (alternative minimum tax) and an amended Schedule K-1 generated by the trust setting forth Mr. Brown's income and deductions as beneficiary. During December 1991 and January 1992 Mr. Brown paid $10,990.55 to the IRS.
In January 1992 the IRS placed tax liens on Mr. Brown's bank account and on the trust payments. In February 1992 Mr. Brown paid, under protest, the remaining assessed amount of tax, fees, penalties, and interest, for total payments of $56,978. The IRS did not respond to Mr. Brown=s second amended return, and refused his request for refund of overpayments. His ensuing suit in the Tax Court was dismissed on March 6, 1992 for lack of jurisdiction pursuant to 26 U.S.C. *6213 as the statutory notice of deficiency required for jurisdiction in the Tax Court never issued to Mr. Brown as a result of the course of the assessment and collection proceedings. In 1994 he brought this refund suit in the Court of Federal Claims. At the court=s instruction, in 1996 the government reviewed Mr. Brown=s second amended return. The IRS determined that the correct tax liability for 1990 was $25,268. No refund of the overpayment, or the undisputed amount thereof, was made. Mr. Brown disputed the assessment of some of the $4,958.01 charged for penalties, interest, and fees. On March 11, 1999 the Court of Federal Claims granted the government=s motion for summary judgment for the entire assessed amount of penalties, interest, and fees, and ordered refund of the overpayment of $26,751.99 plus statutory interest. Mr. Brown appeals from the court=s assessment of additional penalties after expiration of the three-year statute of limitations, and from the dismissal of Counts II and III of his complaint.
Dismissal of Counts II and III
In Counts II and III Mr. Brown sought monetary damages for negligent and tortious acts and violations of procedural due process, in the Service=s failure to review his amended return and ascertain his correct tax until ordered to do so by the Court of Federal Claims. The court dismissed these counts for lack of jurisdiction. George M. Brown v. United States, 36 Fed. Cl. 290 (1996). The dismissal of these counts was not appealable until final decision of all counts of the complaint. See Houston Indus., Inc. v. United States, 78 F.3d 564, 568 (Fed. Cir. 1996); 28 U.S.C. *195(a)(1); Fed. R. Civ. P. 54(b).
On the merits of the dismissal, we give plenary review to decisions concerning the trial court=s jurisdiction. James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541 (Fed. Cir. 1996). The jurisdiction of the Court of Federal Claims is established in part by the Tucker Act, which provides:
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort. 28 U.S.C. *1491(a)(1).
Mr. Brown's damages claims against the United States sound in tort, and thus are expressly excluded from the jurisdiction of the Court of Federal Claims. To the extent that Counts II and III state claims within the purview of Internal Revenue Code *7432 (allowing monetary damages for failure to release a lien), or *7433 (allowing monetary damages for reckless or negligent actions on the part of IRS personnel), these sections specify that actions for damages must be brought in a district court of the United States. We affirm the ruling that the Court of Federal Claims does not have jurisdiction of the portion of these claims based on asserted wrongful acts by the IRS.
Mr. Brown=s due process claims, although undeveloped, appear to be based on the asserted misdeeds of the IRS in its miscalculations of tax due, its non-responsiveness, and the ensuing negligent or tortious levies and liens. These asserted wrongs are not distinct from those for which redress must be taken to the district court under I.R.C. *7432 and *7433. The Court of Federal Claims lacks jurisdiction of constitutional due process claims when the underlying cause of action is not within the court's jurisdiction. See Murray v. United States, 817 F.2d 1580, 1583 (Fed. Cir. 1987).
The dismissal of Counts II and III is affirmed.*fn1
Summary Judgment as to Penalties, Fees and Interest
We give plenary review to the grant of summary judgment, see Deluxe Corp. v. United States, 885 F.2d 848, 849 (Fed. Cir. 1989), resolving any disputed material facts and drawing factual inferences in favor of the non-movant.
The statutory penalty for late payment of tax, when the tax return is timely filed, is 0.5% per month, to a maximum of 25%. 26 U.S.C. *6651(a)(3). No penalty shall be assessed if the taxpayer shows that his failure of timely payment was reasonable and was not a result of willful neglect. Id. Mr. Brown offered no such showing. Similarly, Mr. Brown made no showing of excuse or error with regard to his non-payment of estimated tax, and the Court of Federal Claims correctly held that none of the exceptions listed in 26 U.S.C. *6654(e) applied to Mr. Brown.
The focus of Mr. Brown=s challenge is the assessment in 1996 of an additional penalty, which the government then withheld from the sum which it eventually refunded. Mr. Brown states that since this assessment was made more than three years after the tax return was filed, it is barred by the statute of limitations. See 26 U.S.C. *6501(a) (tax assessment can be made only up to three years after a tax return has been filed). In Fisher v. United States, 80 F.3d 1576 (1996) this court held, applying 26 U.S.C. *6601(e), that the statute of limitations did not bar an offset of interest assessed after the statutory three-year period had run, when the total tax liability was before the court. A companion statute, 26 U.S.C. *6665, relates to the assessment of penalties. Although Mr. Brown challenges Fisher as not well reasoned, it is binding upon this court. We thus must conclude that both the increased interest and penalty are available as setoff.