United States District Court, E.D. Pennsylvania
ROBERT POLSKY, Plaintiff, Pro se, PLYMOUTH MEETING, PA.
LISA POLSKY, Plaintiff, Pro se, PLYMOUTH MEETING, PA.
For DANIEL I. WERFEL, ACTING COMMISSIONER, IRS, Defendant: BEATRIZ T. SAIZ, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, U.S. DEPT OF JUSTICE-TAX DIV, WASHINGTON, DC; E. CHRISTOPHER LAMBERT, LEAD ATTORNEY, U.S. DEPT OF JUSTICE, WASHINGTON, DC; ANNETTA FOSTER GIVHAN, U.S. ATTORNEY'S OFFICE, PHILADELPHIA, PA.
For UNITED STATES, Defendant: ANNETTA FOSTER GIVHAN, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, PHILADELPHIA, PA; BEATRIZ T. SAIZ, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, U.S. DEPT OF JUSTICE-TAX DIV, WASHINGTON, DC; E. CHRISTOPHER LAMBERT, LEAD ATTORNEY, U.S. DEPT OF JUSTICE, WASHINGTON, DC.
TIMOTHY J. SAVAGE, J.
The central and dispositive issue in this action is whether a permanently and totally disabled child who is older than seventeen and qualifies as a dependent under section 152(c) of the Internal Revenue Code (" IRC" ) also qualifies for the child tax credit under section 24 despite the age limitation of seventeen in section 24. Considering the plain language of the statute and its legislative history, we conclude that she does not.
The pro se plaintiffs, Robert and Lisa Polsky, parents of a permanently and totally disabled child, claim that they have been deprived of their right to due process
under the Fourteenth Amendment because the Internal Revenue Service (" IRS" ) intentionally prevented them from appealing the disallowance of the child tax credit (" CTC" ) for the years 2010 and 2011 to the Tax Court. They contend that the IRS misapplied and misinterpreted 26 U.S.C. § § 24 and 152 of the IRC. They believe that because their daughter qualifies as a dependent under § 152(c), she is also qualified as a dependent for a tax credit under § 24 regardless of her age.
Moving to dismiss the complaint, the Commissioner argues that the Polskys are actually seeking a tax refund under 26 U.S.C. § 7422. He contends that not only have they improperly named him as a defendant, but they have also failed to state a claim under § 7422 because they do not qualify for a refund of the child tax credit. The Commissioner further argues that to the extent the Polskys' complaint can be construed as asserting a claim under 42 U.S.C. § 1983 for a violation of their constitutional rights, the court lacks jurisdiction because neither the United States, the IRS nor the Commissioner can be sued under § 1983.
Whether it is a claim of a constitutional violation or one for a tax refund, the Polskys cannot prevail. If it is an action for a constitutional violation, the Polskys cannot establish any constitutional injury or damage to support a cause of action for deprivation of due process. If it is a claim for a refund, they are not entitled to a refund because they do not qualify for the tax credit. Therefore, we shall grant the motion to dismiss the complaint.
According to the allegations in the complaint, the Polskys claimed the § 24 child tax credit for their permanently disabled daughter Amanda for tax years 2010 and 2011. The IRS disallowed the credit for both tax years on the ground that Amanda was over seventeen years old. The IRS initially communicated this denial in a Math Error Notice sent to the Polskys on May 16, 2011, for tax year 2010, and on June 25th, 2012, for tax year 2011 in which it corrected their returns by recalculating the tax liability with the disallowance of the CTC.
The Polskys allege that after contacting the IRS multiple times " to resolve the wrongful disallowance of the tax credits," sometime in 2012, the IRS instructed them to " submit amended returns for tax years
2010 and 2011 specifically stating the reasons why [their] dependent daughter over the age of 17 should be a qualified dependent for the Child Tax Credit."  In December 2012, they submitted amended returns for tax years 2010 and 2011, in which they requested that the IRS review Amanda's " qualified dependent status" and rule on this issue as a " qualified dependent" claim, not as a " Math Error" or other " small mistake." 
In March of 2013, not having received a response from the IRS, the Polskys sent a letter to the IRS Commissioner inquiring about the status of their returns. The IRS responded on April 22, 2013, explaining its reasons for disallowing the child tax credit:
The amended returns you sent in were received December 26, 2012. There were no changes made to your account because we believe the original change we made was correct.
You were not allowed the Child Tax Credit for your dependent Amanda because she did [not] qualify for this credit. In order to qualify for the Child Tax Credit the dependent must be under the age of 17 by the end of the tax year. Our records show that Amanda was age 20 in 2010 and age 21 in 2011.
You questioned the qualifications because she is disabled . . . [T]he fact that she is disabled does not change whether she qualifies for the Child Tax Credit. This credit is based on the age of the dependent only. This is the reason that your tax was higher than you anticipated.
The fact that she is disabled does make a difference in being able to claim her as a dependent, and if you qualify, the Earned Income Tax Credit.
Because they disagreed with the IRS's interpretation of a " qualifying child" under § 24, the Polskys filed a petition in the Tax Court challenging the IRS's decision. In their petition, filed on May 29, 2013, they requested a determination that they were entitled to claim the CTC for their daughter Amanda for tax years 2010 and 2011. On July 17, 2013, the Commissioner moved to dismiss the Polskys' petition for lack of jurisdiction because no Notice of Deficiency had been issued, a prerequisite to confer jurisdiction on the Tax Court. He also argued that the petition should be dismissed because the Polskys did not timely appeal the Math Error Notices by filing a request for abatement as required under 26 U.S.C. § 6213(b). On August 8, 2013, concluding that without a Notice of Deficiency, it lacked jurisdiction to determine a deficiency in or overpayment of the Polskys' tax for 2010 or 2011, the Tax Court granted the Commissioner's motion.
Asserting claims under § 1983 and the Fourteenth Amendment, the Polskys contend that the IRS deliberately prevented them from appealing the disallowance of the child tax credit in order to preclude the Tax Court from issuing a final and non-appealable ruling in their favor rejecting the IRS's interpretation of a " qualifying child" under § 24. They contend that the IRS has a " zealous goal of preventing the legality of [its] actions from being reviewed by any oversight court"
and wants " to avoid any judicial oversight, checks or balances." 
According to the Polskys, the IRS acted improperly when, in denying their claim for the CTC, it issued Math Error Notices. They contend that the IRS issued the Math Error Notices instead of Notices of Deficiency as a " guise," characterizing their claim for the tax credit as a " minor error" or " small mistake." 
The Polskys claim that the IRS denied them due process by directing them to submit improper documents for the purpose of defeating any appeal they could have taken. They argue that after they disputed the basis for the Math Error Notices, the IRS improperly advised them to submit amended returns and later accepted them. They assert that the IRS then took a contrary position before the Tax Court, arguing that the Polskys' petition to review the IRS's disallowance of the tax credit should be dismissed because the Polskys did not timely appeal the Math Error Notices by requesting an abatement as required under 26 U.S.C. § 6213(b).
According to the Polskys, the IRS continued its effort to prevent the Tax Court from reviewing its interpretation of the CTC by refusing to rule on their amended returns. They argue that because they were not challenging math errors, but were challenging the IRS's determination of Amanda's " qualifying child" status, the IRS was required either to find in their favor or deny their challenge with a formal finding on their amended returns in the form of a Notice of Deficiency. Characterizing the IRS's April 2013 letter as a " refus[al] to rule on the amended return," the Polskys assert that the IRS did neither. They contend that because the Tax Court cannot consider an appeal in the absence of a Notice of Deficiency, the IRS " deliberately" did not issue a Notice of Deficiency for the amended returns in order to block them from " seeking judicial review of the IRS decision." 
The Polskys allege that they have been financially damaged because they incurred a higher tax liability than they should have, and were " required to allocate time and resources to defend against the violation of their right to due process and [sic] law."  They make it clear that they are " not seeking monetary compensation from the Federal Court."  Rather, they ask us to " instruct" the IRS to adjust their tax liability to reflect the CTC for tax years 2010 and 2011 and for " future tax years," and to reimburse them for taxes they overpaid. They also ask us to " instruct" the IRS to " immediately review all prior IRS rulings on tax returns from all tax filers," and make the " appropriate corrections to tax liability."  They also request us to " instruct" the IRS to " adjust the wording to future instructions for the child tax
credit" and make them " more complete and more accurate."  Alternatively, they ask us to " instruct" the IRS to issue a Notice of Deficiency to the plaintiffs and " direct this case into Tax Court." 
The parties characterize the basis for the Polskys' claim differently. The Commissioner argues that the action is simply a claim for a tax refund. On the other hand, the Polskys assert that it is an action based on a constitutional procedural due process violation. They allege that they were denied " a legitimate tax deduction" and were " denied due process of administrative procedure and due process of law in that the plaintiffs are required to allocate time and resources to defend against the violation of their right to due process and law."  Their claim is based upon their belief that the IRS intentionally did not issue a Notice of Deficiency so that their appeal to the Tax Court would be dismissed. This conduct, the plaintiffs argue, deprived them of the opportunity to prosecute an appeal from the denial of the tax credit. In either case, the cause of action is founded on the theory that the IRS wrongfully disallowed the tax credit under 26 U.S.C. § 24.
The parties' disagreement may result from a misunderstanding of the process that led to this court and how the Polskys cast their claims. Therefore, it will be helpful to examine the claims in the context of the routes that were available to the Polskys to challenge the disallowance of the CTC.
When tax returns are filed, they are " checked for form, execution, and mathematical accuracy." Treas. Reg. § 601.105(a). If a return contains a mathematical or clerical error that results in more tax due than is shown on the return, the IRS corrects the error and sends a correction notice to the taxpayer. Treas. Reg. § 601.105. The IRS is authorized to immediately assess the new amount of tax with the error corrected, provided it: (1) notifies the taxpayer of the error; (2) explains the error; and (3) tells the taxpayer that a new assessment of the tax has been made based on the correct amount of tax. 26 U.S.C. § 6213(b)(1); Galvan v. C.I.R., T.C. Summ. Op. 2012-112, 2012 WL 5499833, at *5 n.12 (2012) (citing Heasley v. Comm'r, 45 T.C. 448, 457 (1966); Ciciora v. Comm'r, T.C.
Memo 2003-202, 2003 WL 21545884, at *2 (2003)); Malone v. C.I.R., T.C. Summ. Op. 2011-24, 2011 WL 839767, at *8 (2011).
Contrary to the Polskys' contention that the IRS improperly issued Math Error Notices when it disallowed their claim for the CTC for tax years 2010 and 2011, a Math Error Notice was the proper document to inform the Polskys that they were not entitled to the CTC for their daughter. The IRC defines " [m]athematical or clerical error[s]" by describing sixteen errors. 26 U.S.C. § 6213(g). The corrections made by the IRS on the Polskys' 2010 and 2011 tax ...