Court Of Federal Claims Allows Non-Resident To File Amended Returns Where Originally Filed Returns Erroneously Claimed 'Resident' In United States Status

In Montiel v. United States, 114 AFTR 2d 2014 (Ct. Fed. Cl. 8/7/2014), the Court of Federal Claims ordered a claim for refund for an overpayment of income taxes by a person alleged to be a non-resident, for 2007 and 2008, based on the fact that the original returns erroneously declared her to be a resident.

Facts of the Case

In March, 2008, the taxpayer filed a Form 1040 for 2007 as a resident alien listed a California residence. She paid tax and estimated income tax penalty. Subsequently, the taxpayer determined she was a "nonresident alien" under §7701(b)(1)(B) and should have filed a "nonresident" return for 2007, i.e., Form 1040 NR. In June, 2011, she filed an amended 1040X for 2007 requesting a refund for an overpayment of tax of approximately $9,000. The IRS denied the request as "untimely" since the taxpayer had to have filed her amended return form by April 15, 2011, i.e., 3 years from filing her income tax return for 2008 (due date) which was April 15, 2008, or more than 2 years after having paid the tax. See §6513(a). Essentially the same erroneous "resident" status was set forth on her return filed for 2008 and was later amended through a Form 1040X, again based on the correction in the taxpayer's view of her "nonresident" status for 2008. The refund claim for 2008 was filed more than three years after the due date for the 2008 return on April 15, 2009 but within the applicable period for non-residents.

The taxpayer contended that as a non-resident, §6072(c) requires that the deadline for filing is June 15 of the succeeding taxable year and not April 15 which is applied to U.S. citizens and residents. The Service disagreed arguing that because the taxpayer originally filed as a resident alien, the government was entitled to and in fact justifiably relied on such representation and therefore the 3 year statute of limitations period for refunds should have commenced on April 15 of 2008 and 2009 respectively.

Application of the Tucker Act (and Not the Internal Revenue Code)

Under 28 U.S.C. §1491(a)(1), known as the "Tucker Act", the Court of Federal Claims has jurisdiction to hear certain monetary claims against the United States. See U.S. v. Testan, 424 U.S. 392, 398 (1976). But the Tucker Act does not, in the view of the Court of Federal Claims, create a substantive right to monetary relief. Instead, a plaintiff must identify an additional money mandating statute in order to recover damages from the government. The Court noted...