United States District Court, N.D. Indiana, Hammond Division
CHARLES W. DIXON, Plaintiff,
v.
INTERNAL REVENUE SERVICE, Defendant.
OPINION AND ORDER
JOHN
E. MARTIN MAGISTRATE JUDGE
This
matter is before the Court on United States of America's
Motion to Dismiss [DE 12], filed by Defendant United States
of America, improperly sued as Internal Revenue Service, on
November 26, 2018, and Plaintiff's Motion for Leave to
File an Amended Complaint to Join an Additional Party [DE
23], filed by Plaintiff Dixon, pro se, on March 25,
2019. Plaintiff Dixon seeks to amend his Complaint to add his
wife as a plaintiff in this action. Defendant United States
seeks to have the case dismissed.
I.
Background
On July
26, 2018, Dixon filed a Complaint regarding his tax filing
for the 2012 income tax year, alleging that the IRS
improperly denied his timely first claim for refund. On
November 26, 2018, the United States filed the instant Motion
to Dismiss. Dixon filed a response on December 13, 2018, and
on March 12, 2019, the United States filed a reply. On March
25, 2019, Dixon filed the instant Motion to Amend. The United
States filed a response on April 4, 2019, and on April 19,
2019, Dixon filed a reply.
II.
Standard of Review
Federal
Rule of Civil Procedure 12(b)(1) requires a court to dismiss
a cause of action when the court lacks subject matter
jurisdiction. Fed.R.Civ.P. 12(b)(1). The “district
court must accept as true all well-pleaded factual
allegations, and draw reasonable inferences in favor of the
plaintiff.” Ezekiel v. Michel, 66 F.3d 894,
897 (7th Cir. 1995). However, when subject matter
jurisdiction is not apparent on the face of the complaint and
is contested, the district court may “properly look
beyond the jurisdictional allegations of the complaint and
view whatever evidence has been submitted on the issue to
determine whether in fact subject matter jurisdiction
exists.” Evers v. Astrue, 536 F.3d 651, 656-57
(7th Cir. 2008). “In all cases, the party asserting
federal jurisdiction has the burden of proof to show that
jurisdiction is proper.” Travelers Prop. Cas. v.
Good, 689 F.3d 714, 722 (7th Cir. 2012) (citing
McNutt v. Gen. Motors Acceptance Corp., 289 U.S.
178, 198 (1936)).
Federal
Rule of Civil Procedure 15(a) provides that, when a party
seeks leave to amend a pleading, the “court should
freely give leave when justice so requires.”
Fed.R.Civ.P. 15(a)(2). Thus, if the underlying facts or
circumstances relied upon by a plaintiff are potentially a
proper subject of relief, the party should be afforded an
opportunity to test the claim on the merits. Foman v.
Davis, 371 U.S. 178, 182 (1962). The decision whether to
grant or deny a motion to amend lies within the sound
discretion of the district court. Campbell v. Ingersoll
Milling Mach. Co., 893 F.2d 925, 927 (7th Cir. 1990).
However, leave to amend is “inappropriate where there
is undue delay, bad faith, dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, or futility of the
amendment.” Villa v. City of Chicago, 924 F.2d
629, 632 (7th Cir. 1991) (citing Foman, 371 U.S. at
183).
When a
plaintiff seeks to add a new plaintiff through an amended
complaint, Federal Rule of Civil Procedure 20 is implicated.
See Lee v. Cook Cnty. Ill., 635 F.3d 969, 971 (7th
Cir. 2011). Rule 20 provides that plaintiffs may be joined to
an action if “(A) they assert any right to relief
jointly, severally, or in the alternative with respect to or
arising out of the same transaction, occurrence, or series of
transactions or occurrences; and (B) any question of law or
fact common to all plaintiffs will arise in the
action.” Fed.R.Civ.P. 20(a)(1). “The standard for
permissive joinder under Rule 20 is liberal, ”
Eclipse Mfg. Co. v. M & M Rental Ctr., Inc., 521
F.Supp.2d 739, 744 (N.D. Ill. 2007), and “courts are
inclined to find that claims arise out of the same
transaction or occurrence when the likelihood of overlapping
proof and duplication in testimony indicates that separate
trials would result in delay, inconvenience, and added
expense to the parties and to the court.” 7 Charles
Alan Wright et al., Federal Practice and Procedure §
1653 (3d ed. 2001); see also Thompson v. Boggs, 33
F.3d 847, 858 (7th Cir. 1994).
III.
Analysis
The
Complaint, filed July 26, 2018, addresses federal income
taxes for the tax year ending December 31, 2012. The parties
agree that Dixon timely filed an administrative claim for a
tax refund via Form 1040X on April 13, 2015. The IRS sent a
Letter 105C to Dixon on January 21, 2016, stating that the
claim of April 13, 2015, could not be allowed. Dixon filed
another Form 1040X in June 2016, and received a Letter 105C
dated August 3, 2016, disallowing that claim. During this
time, Dixon was engaged in bankruptcy proceedings: he filed
for bankruptcy on or about September 2, 2010, and he states
that it was completed on July 22, 2016. In its Motion to
Dismiss, the United States seeks to have Dixon's suit
dismissed as barred by the applicable statute of limitations.
Dixon filed a Motion to Amend, seeking to add his spouse as a
party plaintiff.
A.
Motion to Dismiss
The
United States argues that Dixon's suit is untimely and
must therefore be dismissed pursuant to Federal Rule of Civil
Procedure 12(b)(1). Dixon argues that the statute of
limitations was tolled when he filed for bankruptcy and that
he relied on written guidance he received from the IRS, so
the United States should be estopped from arguing a shorter
statute of limitations should apply.
Any
suit “for the recovery of any internal revenue tax,
penalty, or other sum” must be commenced before
“the expiration of 2 years from the date of mailing by
certified mail or registered mail by the Secretary to the
taxpayer of a notice of the disallowance of the part of the
claim to which the suit or proceeding relates.” 26
U.S.C. § 6532(a)(1). The United States argues that Dixon
did not file his suit for refund until more than two years
after the first administrative claim was denied, so the case
must be dismissed for lack of subject matter jurisdiction.
Dixon
argues first that the statute of limitations was tolled when
he filed for bankruptcy, so that the statue of limitations
was tolled until January 22, 2017, six months after it was
completed, citing to 26 U.S.C. § 6503(h). However, as
the United States argues, that section of the code deals with
assessment of taxes by the IRS, and “tolls the period
of time in which the United States can collect a tax against
a taxpayer/debtor, ” not the time for a suit brought
against the United States. Merisel of Americas, Inc. v.
United States, No. 97-0723T, 2000 WL 641604, at *6
(D.R.I. Feb. 22, 2000) (comparing 26 U.S.C. § 6503(h)
with 26 U.S.C. § 6532(c)). Section 6532 provides the
statute of limitations for lawsuits brought by taxpayers
against the Government, and does not include a tolling
provision for the plaintiff's bankruptcy. See 26
U.S.C. ยง6532(a). The disallowance letter ...