Tax practitioners are frequently tasked with assisting clients in claiming tax refunds. A critical aspect of this process is ensuring strict adherence to the statutory and regulatory requirements governing such claims, particularly the timeliness mandates established under 26 U.S.C. § 6511. The recent case of Hamilton v. United States, Case No. 24-cv-04491-BLF (N.D. Cal. Mar. 26, 2025), serves as a potent reminder of the jurisdictional pitfalls awaiting taxpayers who fail to meet these deadlines and the specific evidentiary burdens required for exceptions like financial disability tolling. This article delves into the details of this case, providing insights relevant to CPAs in tax practice.

Factual Background

The plaintiff, Lenora Hamilton, sought a refund of $2,070 in federal income taxes for the 2017 tax year. Her employer had withheld this amount during the tax year. Hamilton filed her 2017 tax return in November 2021, seeking the aforementioned refund. The Internal Revenue Service (IRS) denied her claim as untimely. Subsequently, Hamilton filed an administrative appeal in August 2022, which was also denied in February 2024. Ultimately, she filed a pro se civil action for the refund on July 25, 2024. Hamilton acknowledged the late filing of her 2017 return but argued for tolling based on financial disability, citing a work injury and job loss in 2016, loss of insurance, pursuit of benefits, and eviction proceedings in 2021, which she contended prevented her from meeting the original April 15, 2021 filing deadline.

Taxpayer’s Request for Relief and Legal Arguments

Despite the late filing, Hamilton presented several arguments to the District Court for the Northern District of California, seeking to overcome the statutory time limitations:

Tolling for Financial Disability under 26 U.S.C. § 6511(h): Hamilton argued that her financial difficulties constituted a financial disability that should suspend the limitation and look-back periods. She asserted that she submitted the required physician’s statement and taxpayer’s statement during her administrative appeal.
Reliance on the Taxpayer Bill of Rights under 26 U.S.C. § 7803(a)(3): Hamilton requested the court to allow her suit to proceed under the provisions of the Taxpayer Bill of Rights.
Invocation of 28 U.S.C. § 1346: She also cited this statute as a basis for the district court’s jurisdiction over her claim for recovery of taxes.
Reference to the COVID-19 Pandemic Emergency Declaration: Hamilton sought equitable relief based on the President’s declaration of emergency during the COVID-19 pandemic.

Court’s Analysis of the Law

The court began its analysis by addressing the fundamental principle of sovereign immunity, noting that the United States can only be sued if it has waived this immunity, citing Libitzky v. United States, 110 F.4th 1166, 1171 n.1 (9th Cir. 2024) and United States v. Mitchell, 445 U.S. 535, 538 (1980). The court emphasized that this immunity is waived for tax refund lawsuits only if the taxpayer has complied with specific statutory and regulatory requirements, particularly those outlined in 26 U.S.C. § 7422(a) and 26 U.S.C. § 6511. Failure to meet these requirements results in a lack of subject matter jurisdiction, necessitating dismissal of the suit.

The court then detailed the jurisdictional timeliness requirements under § 6511, explaining the interplay between the limitation period under § 6511(a) and the look-back period under § 6511(b).

Limitation Period (§ 6511(a)): This provision requires a taxpayer to file a claim for credit or refund within three years from the time the return was filed or two years from the time the tax was paid, whichever of such periods expires later, citing Zeier v. IRS, 80 F.3d 1360, 1363 (9th Cir. 1996). The court noted that failure to file within this period bars any refund, citing Libitzky, 110 F.4th at 1171.
Look-Back Period (§ 6511(b)(2)): Even if a claim is timely under the limitation period, the amount of the refund is limited by the look-back provision. Under § 6511(b)(2)(A), if the three-year limitation period applies, the refund is limited to the amount paid during the three years immediately preceding the filing of the refund claim, plus any extension granted for filing the return, citing Libitzky, 110 F.4th at 1172. If the three-year limitation period does not apply, a two-year look-back period applies under § 6511(b)(2)(B), citing Libitzky, 110 F.4th at 1172. The court explicitly stated that these timeliness requirements under § 6511(a) and (b) are jurisdictional, citing Zeier, 80 F.3d at 1363-64.

Regarding the financial disability tolling provision under 26 U.S.C. § 6511(h), the court outlined the specific documentary requirements established by IRS Revenue Procedure 99-21 § 4:

A written statement by a physician containing specific information about the impairment, the physician’s opinion that it prevented the taxpayer from managing their financial affairs, the expected duration or nature of the impairment, the specific period of inability to manage finances, and a signed certification, citing Barbeau v. IRS, No. 2:21-cv-08544-VAP-(Ex), 2022 WL 3588420, at *2 (C.D. Cal. July 19, 2022).
A written statement by the taxpayer attesting that no other person was authorized to act on their behalf in financial matters during the period of disability, citing Barbeau, 2022 WL 3588420, at *2.

The court also addressed Hamilton’s other asserted grounds for relief:

The Taxpayer Bill of Rights does not grant new enforceable rights but rather imposes an obligation on the IRS Commissioner to ensure employees act in accordance with existing taxpayer rights, citing Facebook, Inc. v. Internal Revenue Serv., No. 17-CV-06490-LB, 2018 WL 2215743, at *13 (N.D. Cal. May 14, 2018).
While 28 U.S.C. § 1346(a)(1) grants district courts jurisdiction over civil actions for the recovery of erroneously or illegally collected taxes, citing United States v. Dalm, 494 U.S. 596, 601 (1990), this jurisdiction is contingent upon compliance with other jurisdictional requirements, including 26 U.S.C. §§ 7422 and 6511, citing Dalm, 494 U.S. at 601-02.
The Supreme Court has explicitly held that equitable exceptions to the limitations in § 6511 are not permitted, even based on compelling circumstances, citing Reynoso v. United States, 692 F.3d 973, 982 (9th Cir. 2012) and United States v. Brockamp, 519 U.S. 347, 352 (1997).

Application of the Law to the Facts

Applying these legal principles to Hamilton’s case, the court found that while her refund claim was filed within three years of filing her 2017 tax return, thus meeting the limitation period under § 6511(a), it was untimely under the three-year look-back period of § 6511(b)(2)(A). Because the taxes were withheld during the 2017 tax year, they were deemed paid on the due date of the return, April 15, 2018, pursuant to 26 U.S.C. § 6513(b)(2), citing Reynoso, 692 F.3d at 978. Hamilton’s refund claim, filed in November 2021, was outside the three-year look-back window preceding the filing date. The court explicitly stated that § 6511(b)(2)(A) is jurisdictional, citing Zeier, 80 F.3d at 1364.

Regarding the financial disability argument, the court noted that Hamilton submitted the required physician’s and taxpayer’s statements with her administrative appeal, not with her original claim for refund, which likely did not comply with the requirements for tolling under § 6511(h), citing Barbeau, 2022 WL 3588420, at *2. Furthermore, the physician’s statement provided did not include an opinion that Hamilton’s medical conditions prevented her from managing her financial affairs, a crucial requirement for establishing financial disability under § 6511(h). As a result, Hamilton failed to establish entitlement to tolling under § 6511(h), leading to a lack of subject matter jurisdiction, citing Barbeau, 2022 WL 3588420, at *5, Milton v. United States Internal Revenue Serv., No. 2:16-CV-00554-RAJ, 2017 WL 2573995, at *2 (W.D. Wash. June 14, 2017), and Reilly v. United States, No. CV 14-07936 DDP (PJWx), 2015 WL 5305210, at *5 (C.D. Cal. Sept. 10, 2015).

The court summarily dismissed Hamilton’s other arguments, reiterating that the Taxpayer Bill of Rights does not create new rights, that § 1346 is subject to the limitations of § 6511, and that equitable tolling is not permitted under § 6511.

Court’s Conclusions

Based on the analysis, the court GRANTED the Government’s motion to dismiss for lack of subject matter jurisdiction without leave to amend. The court concluded that Hamilton’s refund claim was untimely under § 6511(b)(2)(A) and that she had not adequately established financial disability tolling under § 6511(h). The court found that amendment of the complaint would be futile as these jurisdictional deficiencies could not be cured. Finally, the court dismissed the action without prejudice.

Implications for Tax Practitioners

Hamilton v. United States underscores several critical points for tax practitioners:

Strict Adherence to Timeliness Requirements: The case reinforces the jurisdictional nature of the limitation and look-back periods under 26 U.S.C. § 6511. Practitioners must emphasize the importance of timely filing of both tax returns and refund claims to their clients.
Specific Requirements for Financial Disability Tolling: When advising clients who may qualify for financial disability tolling under 26 U.S.C. § 6511(h), it is crucial to ensure that both the physician’s statement and the taxpayer’s statement are properly prepared and submitted with the original claim for refund. The content of the physician’s statement must explicitly opine on the taxpayer’s inability to manage their financial affairs.
Limited Scope of Taxpayer Bill of Rights and 28 U.S.C. § 1346: Practitioners should be aware that the Taxpayer Bill of Rights does not create new avenues for relief regarding untimely claims, and that the general jurisdictional grant under 28 U.S.C. § 1346 is subject to the specific limitations outlined in the Internal Revenue Code, particularly § 6511.
No Equitable Tolling for § 6511: Clients must be informed that courts are generally prohibited from creating equitable exceptions to the strict deadlines imposed by § 6511, even in cases of hardship.

By understanding the nuances of cases like Hamilton v. United States, tax professionals can better guide their clients through the complexities of tax refund claims and avoid potential jurisdictional barriers. Ensuring compliance with the statutory and regulatory requirements from the outset is paramount in securing a favorable outcome for taxpayers seeking refunds.

Prepared with assistance from NotebookLM.