NOTE: This disposition is nonprecedential.
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`MOHAMAD E. TAHA, DECEASED, SANAA M.
`YASSIN, HIS WIFE,
`Plaintiffs-Appellants
`
`v.
`
`UNITED STATES,
`Defendant-Appellee
`______________________
`
`2018-1879
`______________________
`
`Appeal from the United States Court of Federal
`Claims in No. 1:17-cv-01174-CFL, Judge Charles F.
`Lettow.
`
`______________________
`
`Decided: December 14, 2018
`______________________
`
`SANAA M. YASSIN, Bradenton, FL, pro se.
`
`
` JENNIFER MARIE RUBIN, Tax Division, United States
`Department of Justice, Washington, DC, for defendant-
`appellee. Also represented by MICHAEL J. HAUNGS,
`RICHARD E. ZUCKERMAN.
` ______________________
`
`Before REYNA, TARANTO, and HUGHES, Circuit Judges.
`
`

`

`2
`
`TAHA v. UNITED STATES
`
`PER CURIAM.
`Plaintiffs-Appellants pro se, Mohamad E. Taha (de-
`ceased) and Sanaa M. Yassin, with the assistance of Mr.
`Ali Taha, appeal the decision of the United States Court
`of Federal Claims dismissing their income tax refund
`claims for lack of subject-matter jurisdiction. For the
`reasons discussed below, we affirm-in-part, vacate-in-
`part, and remand.
`
`BACKGROUND
`Appellants seek a refund of $14,177 for federal income
`taxes paid for the 2002 and 2003 tax years, plus interest
`and legal costs. Between 2002 and 2004, Mr. M. Taha
`was a 10% shareholder of Atek Construction, Inc.
`(“Atek”), a California S Corporation, but had no direct role
`in its operations. Mr. M. Taha earned shareholder income
`of $85,010 in 2002 and $77,813 in 2003. Appellants assert
`that Mr. M. Taha received only $20,000 of that income
`from Atek during those years. Mr. M. Taha passed away
`in 2007.
`Appellants filed their 2002 and 2003 tax returns with
`the Internal Revenue Service (“IRS”) on April 3, 2003 and
`April 14, 2004, respectively, paying the tax due on the full
`amount of the reported shareholder income for each year.
`Both returns reported Mr. M. Taha’s shareholder income
`from Atek as his only income. Appellants did not file a
`tax return for the 2004 tax year by the due date because
`they allege they had no income to report.
`Atek ceased operations in 2004 due to financial diffi-
`culties, and was dissolved in 2006. Appellants contend
`that at this time it became clear that Atek would not pay
`the remainder of Mr. M. Taha’s shareholder income for
`2002 and 2003. Appellants sought a refund from the IRS
`of the alleged overpayment of taxes on that income by
`filing amended tax returns and deducting the unpaid
`income as bad debt. Appellants filed an amended 2002
`
`

`

`TAHA v. UNITED STATES
`
`3
`
`tax return (the “2002 claim”) in November 2007.1 Appel-
`lants alleged in their complaint that they also filed an
`amended 2003 tax return (the “2003 claim”). Both
`amended returns were dated November 9, 2007. IRS
`records reflect the filing of the 2002 claim, and make no
`mention of the 2003 claim.
`The IRS first disallowed the 2002 claim on December
`20, 2007. It is undisputed that this notice of disallowance
`only discussed the 2002 claim, not the 2003 claim. The
`record before us does not indicate that the IRS disallowed
`the 2003 claim in any other communication. Appellants
`appealed the disallowance of the 2002 claim to the IRS on
`January 21, 2008. The IRS denied the appeal on October
`29, 2009.
`Appellants next attempted to obtain a refund by filing
`an amended 2004 tax return on November 1, 2009 (the
`“2004 claim”).2 In the 2004 claim, Appellants again
`deducted the unpaid shareholder income as bad debt. The
`IRS first disallowed the 2004 claim on November 28,
`2012. Appellants also appealed this disallowance to the
`IRS, and continued pressing their 2004 claim with the
`IRS until April 2017.
`On May 10, 2017, after exhausting their options with
`the IRS, Appellants filed a tax refund suit in the U.S.
`District Court for the Middle District of Florida. By this
`time, Mr. M. Taha was deceased, and Ms. Yassin no
`
`
`1 The Court of Federal Claims noted discrepancies
`in filing dates between Appellants’ contentions and IRS
`records. The exact filing dates have no bearing on the
`resolution of the jurisdictional question.
`2 Appellants filed their initial 2004 tax return on
`October 5, 2011, after they filed their amended 2004
`return, because the IRS would not accept the amended
`return until an initial return was filed.
`
`

`

`4
`
`TAHA v. UNITED STATES
`
`longer resided in the United States. Because none of the
`Appellants resided in its judicial district, the district court
`found that
`it
`lacked
`jurisdiction under 28 U.S.C.
`§ 1402(a)(1), and transferred the case to the Court of
`Federal Claims (“Claims Court”). The transfer complaint
`was filed with the Claims Court on September 18, 2017.
`On January 30, 2018, the government moved to dis-
`miss the complaint for lack of jurisdiction under Federal
`Rule of Civil Procedure 12(b)(1). The government argued
`that the Claims Court lacked jurisdiction because Appel-
`lants did not file their tax refund claims with the IRS
`within the applicable three-year limitation period. Appel-
`lants countered that their tax refund claims were timely
`filed because they relate to deductions of unpaid business
`debt, and are therefore subject to a limitations period
`longer than three years.
`On April 10, 2018, the Claims Court granted the gov-
`ernment’s motion. The Claims Court combined all three
`of Appellants’ tax refund claims in its analysis, and
`concluded that even if Appellants timely filed their tax
`refund claims with the IRS, it lacked jurisdiction over
`those claims because Appellants did not initiate their suit
`within two years from the date the IRS first mailed
`notices of disallowance for each claim, as required by
`26 U.S.C. § 6532(a)(1).
`On April 19, 2018, the government filed a motion, ask-
`ing the Claims Court to clarify when the two-year statu-
`tory limitation period began to run with respect to the
`2003 claim. The Claims Court granted the government’s
`motion the same day, and although it questioned whether
`the 2003 claim was filed, the Claims Court determined
`that it need not resolve that issue.
`This appeal followed. We have jurisdiction pursuant
`to 28 U.S.C. § 1295(a)(3).
`
`
`

`

`TAHA v. UNITED STATES
`
`5
`
`DISCUSSION
`We review decisions of the Court of Federal Claims to
`dismiss for lack of subject-matter jurisdiction de novo, and
`its underlying factual findings for clear error. See Fer-
`reiro v. United States, 350 F.3d 1318, 1324 (Fed. Cir.
`2003) (citations omitted). As plaintiffs, Appellants must
`establish jurisdiction by a preponderance of the evidence.
`Estes Express Lines v. United States, 739 F.3d 689, 692
`(Fed. Cir. 2014). In deciding a motion to dismiss for lack
`of subject-matter jurisdiction, the court assumes all
`uncontroverted factual allegations in the complaint to be
`true and draws all reasonable inferences in the plaintiffs’
`favor. Henke v. United States, 60 F.3d 795, 797 (Fed. Cir.
`1995).
`The trial court must make sufficient factual findings
`on the material issues to allow this court to have a basis
`for meaningful review. Nutrition 21 v. United States, 930
`F.2d 867, 869 (Fed. Cir. 1991). “[A]ppellate courts may
`not make findings of fact in the first instance.” Oracle
`Am., Inc. v. Google Inc., 750 F.3d 1339, 1373 (Fed. Cir.
`2014); see also Golden Bridge Tech., Inc. v. Nokia, Inc.,
`527 F.3d 1318, 1323 (Fed. Cir. 2008) (“Appellate courts
`review district court judgments; we do not find facts.”).
`Where there exists a factual dispute with respect to the
`truth of jurisdictional allegations, the trial court must
`resolve that dispute, and is permitted to look beyond the
`pleadings to do so. See Cedars-Sinai Med. Ctr. v. Wat-
`kins, 11 F.3d 1573, 1583–84 (Fed. Cir. 1993).
`The doctrine of sovereign immunity bars suit against
`the United States unless it has expressly consented to be
`sued. United States v. Mitchell, 445 U.S. 535, 538 (1980).
`The United States has consented to be sued for taxes
`improperly assessed or collected, 28 U.S.C. § 1346(a)(1),
`but only if the plaintiff complies with two additional
`jurisdictional requirements set forth in 26 U.S.C. §§ 7422
`and 6532.
`
`

`

`6
`
`TAHA v. UNITED STATES
`
`First, § 7422 of the Internal Revenue Code (“IRC”)
`provides that “[n]o suit or proceeding shall be maintained
`in any court for the recovery of any internal revenue
`tax . . . until a claim for refund or credit has been duly
`filed with the [IRS].” United States v. Clintwood Elkhorn
`Min. Co., 553 U.S. 1, 4–5 (2008) (quoting 26 U.S.C.
`§ 7422(a)) (second alteration in original). To be duly filed,
`a taxpayer must ordinarily file a refund claim with the
`IRS “within 3 years from the time the return was filed or
`2 years from the time the tax was paid,” whichever occurs
`later. 26 U.S.C. § 6511(a). For refund claims relating to
`certain types of designated overpayments, including
`“business” bad debt, the period of limitation instead “shall
`be 7 years from the date prescribed by law for filing the
`return.” 26 U.S.C. § 6511(d)(1). Section 166(d) of the IRC
`restricts “business” debt to debt that relates to the tax-
`payer’s “trade or business.” 26 U.S.C. § 166(d)(2).
`Whether bad debt should be characterized as “busi-
`ness” or “nonbusiness” is a question of fact to be resolved
`by the trial court. See Adelson v. United States, 737 F.2d
`1569, 1574–75 (Fed. Cir. 1984); Hunsaker v. Comm’r, 615
`F.2d 1253, 1256 n.4 (9th Cir. 1980) (citing United States v.
`Generes, 405 U.S. 93 (1972)). Debts arising from mere
`investments in a corporation do not rise to the level of
`“business” debts. Whipple v. Comm’r, 373 U.S. 193, 202
`(1963) (“[I]nvesting is not a trade or business and the
`return to the taxpayer, though substantially the product
`of his services, legally arises not from his own trade or
`business but from that of the corporation.”).
`Second, § 6532 establishes jurisdictional time limita-
`tions on tax refund suits. A tax refund suit may not be
`brought until six months after the filing of a tax refund
`claim with the IRS, unless the IRS renders a decision
`before
`the six-month period expires.
` 26 U.S.C.
`§ 6532(a)(1). A tax refund suit must be brought within
`two years from the date the IRS mails the first notice of
`disallowance for a refund claim. Id. This two-year period
`
`

`

`TAHA v. UNITED STATES
`
`7
`
`is not extended by any consideration, reconsideration, or
`action by the IRS with respect to a refund claim following
`the mailing of a notice of disallowance. Marcinkowsky v.
`United States, 206 F.3d 1419, 1421 (Fed. Cir. 2000); see
`also 26 U.S.C. § 6532(a)(4).
`A. 2002 and 2004 Claims
`Concerning the 2002 and 2004 claims, the Claims
`Court correctly found that it lacked jurisdiction because
`Appellants did not file their tax refund suit within the
`statutorily-prescribed two-year period from the date the
`IRS first mailed notices of disallowance for those claims.
`Appellants concede that the IRS first disallowed the
`2002 claim on December 20, 2007. This means that for
`the court to have jurisdiction over the 2002 claim, Appel-
`lants must have commenced their action by December 20,
`2009. See 26 U.S.C. § 6532(a)(1). But Appellants did not
`file their tax refund suit in the district court until May 10,
`2017, almost ten years after the first disallowance for the
`2002 claim. The Claims Court therefore lacks jurisdiction
`over the 2002 claim.
`Appellants concede that the IRS first disallowed the
`2004 claim on November 28, 2012. Appellants had two
`years from that date to bring their suit, 26 U.S.C.
`§ 6532(a)(1), but did not do so until 2017, almost five
`years later. The Claims Court therefore lacks jurisdiction
`over the 2004 claim.
`Appellants assert that they could not file their suit
`until they exhausted all options for reconsideration by the
`IRS, because until such time “[t]here was never an out-
`right rejection by the IRS.” Appellants’ Reply Br. 25–27.
`Appellants further contend that the IRS made its final
`rejection on August 28, 2015, when it mailed the last
`notice of disallowance with respect to the 2004 claim, and
`as such, their suit is timely. But the relevant date that
`triggers the two-year limitation period is the date of
`
`

`

`8
`
`TAHA v. UNITED STATES
`
`mailing of the first notice of disallowance with respect to
`any tax refund claim. Under § 6532(a)(4), any subsequent
`“IRS reconsideration does not extend the time to file a
`refund suit.” Marcinkowsky, 206 F.3d at 1422. Hence,
`Appellants’ appeals to the IRS following the first notices
`of disallowance for the 2002 and 2004 claims did not
`extend the time to file the related actions.
`Appellants point to the statement by the district court
`that the Claims Court “has concurrent jurisdiction with
`district courts” over their claims under 28 U.S.C.
`§ 1346(a). Appellants’ Reply Br. 15. It is true that § 1346
`confers concurrent jurisdiction over tax refund claims on
`the Claims Court. But that is only the beginning of the
`jurisdictional inquiry. A plaintiff must also meet the
`additional requirements imposed by § 7422 (requiring
`that taxpayers first file a refund claim with the IRS) and
`§ 6532 (imposing a limitation period for filing tax refund
`suits) before the Claims Court will have jurisdiction over
`her tax refund claims. Appellants have not met these
`requirements with respect to the 2002 and 2004 claims.
`Because Appellants have not established that they
`filed their suit within the two-year time period required
`by § 6532(a)(1), the Claims Court correctly found that it
`lacks jurisdiction over the 2002 and 2004 claims.
`B. 2003 Claim
`Whether the Claims Court has jurisdiction over the
`2003 claim depends on three factual questions: (1) wheth-
`er Appellants filed the 2003 claim, (2) whether the 2003
`claim was timely, and (3) whether the IRS disallowed the
`2003 claim. These issues were disputed before the Claims
`Court and are material to the jurisdictional question. The
`Claims Court erred when it declined as not necessary to
`resolve these questions. Although the Claims Court
`suggested that the answers did not matter, given 26
`U.S.C. § 6511(a), (b), that suggestion is legally incorrect.
`
`

`

`TAHA v. UNITED STATES
`
`9
`
`Starting with the first question, Appellants alleged in
`their complaint that they filed the 2003 claim, and the
`Claims Court found that the 2003 claim was dated No-
`vember 9, 2007. The government disputed the filing of
`the 2003 claim, arguing that IRS records do not show
`receipt of the 2003 claim. The government renews this
`argument on appeal, and asserts that “IRS records are
`presumed to be true, accurate, and correct.”3 Appellee’s
`Br. 14 (internal quotation marks and citation omitted).
`Although the Claims Court expressed doubt that the 2003
`claim was filed, it declined to resolve the issue. This is a
`material factual dispute that the Claims Court was re-
`quired to resolve to allow this court to make a meaningful
`review. Oracle, 750 F.3d at 1373 (“[W]here there are
`material facts in dispute and those facts have not yet been
`resolved by the trier of fact, appellate courts may not
`make findings of fact in the first instance.”).
`If the claim was filed, the Claims Court also erred in
`not resolving the second question: whether Appellants’
`2003 claim was timely filed. The timeliness of the 2003
`claim in turn depends on whether it relates to “business”
`bad debt, such that the longer limitation period applies.4
`Appellants alleged in the complaint (and continue to do so
`on appeal) that their 2003 claim relates to “business” bad
`debt, and was therefore timely filed within the applicable
`seven year period under § 6511(d)(1). The government
`counters that the 2003 claim relates only to “nonbusiness”
`
`
`3 The mere fact that IRS records do not show re-
`ceipt of the 2003 claim is not dispositive of this issue,
`meaning that Appellants may be able to show that the
`claim was timely mailed. See Jones v. United States, 226
`F.2d 24, 27 (9th Cir. 1955).
`4
`It is undisputed that Appellants did not file the
`2003 claim within the standard three-year limitation
`period provided by § 6511(a).
`
`

`

`10
`
`TAHA v. UNITED STATES
`
`bad debt because the relevant income was owed to Mr. M.
`Taha solely in his capacity as a shareholder, and the loss
`of such income cannot be classified as a “business” bad
`debt under controlling law because it does not relate to
`the taxpayer’s “trade or business.” See Whipple, 373 U.S.
`at 202. As such, the government contends the applicable
`period of limitation is three years under § 6511(a), and
`the 2003 claim was therefore untimely.
`The Claims Court found that Appellants’ documents
`suggest that Atek could have been a family-run business,
`which in turn could suggest that Mr. M. Taha’s unpaid
`shareholder income could plausibly be classified as “busi-
`ness” bad debt. The Claims Court, however, did not
`resolve this factual issue. If the above three factual
`issues are resolved in Appellants’ favor, then the Claims
`Court would have jurisdiction over the 2003 claim. If it
`found that the claim was filed, then the question of
`whether the 2003 claim was timely filed as “business” bad
`debt, therefore, presents a material factual dispute that
`the Claims Court was required to resolve in the first
`instance.
`If the claim was timely filed, the Claims Court should
`have also resolved the third and final question concerning
`the 2003 claim: whether the IRS disallowed the 2003
`claim. Appellants argue that the 2003 claim “was merely
`ignored by the IRS.” Appellants’ Reply Br. 22. The
`government disputes this allegation—without contesting
`that Appellants presented the allegation to the Claims
`Court—and asserts that the notice of disallowance for the
`2002 claim applied equally to the 2003 claim. But the
`Claims Court never decided whether the 2003 claim was
`disallowed. If the 2003 claim was not disallowed, then
`the two-year limitation period under § 6532(a)(1) did not
`start running for the 2003 claim. This is a material
`factual issue that the Claims Court was required to
`resolve.
`
`

`

`TAHA v. UNITED STATES
`
`11
`
`If Appellants timely filed the 2003 claim and the IRS
`never disallowed it, then the Claims Court would have
`jurisdiction. The Claims Court was thus bound to resolve
`these factual issues. See Oracle, 750 F.3d at 1373; Nutri-
`tion 21, 930 F.2d at 869. Because it declined to do so, we
`are unable to meaningfully review its conclusion with
`respect to the 2003 claim.
`The absence of findings on the issues discussed above
`is not harmless error. The Claims Court suggested that
`resolution of the issues was unnecessary when it stated
`that “if an amended return for 2003 was actually filed
`with the IRS, but not acted upon, then 26 U.S.C. § 6511(a)
`would constitute a bar, and 26 U.S.C. § 6511(b)(2)(B)
`would limit the refund allowable.” S.Appx. 14. We disa-
`gree.
`Section 6511(d)(1) provides that if the claim for refund
`relates to a deductible “bad debt” described in 26 U.S.C.
`§ 166, the taxpayer has seven years to file. 26 U.S.C.
`§ 6511(d)(1). The Claims Court wrote: “In short, and
`given the status of the record before the court of the
`pleading stage, plaintiffs may well have plausibly alleged
`that the unrealized shareholder income fits within the
`business bad debt provisions of Section 6511.” Taha v.
`United States, 137 Fed. Cl. 462, 468 (2018).
`If Appellants are entitled to the seven-year filing pe-
`riod, then 26 U.S.C. § 6511(b)(2)(B) does not limit the
`claim for refund in the way the Claims Court suggested.
`The controlling provision of § 6511(d)(1) provides:
`In the case of a claim described in this paragraph
`the amount of the credit or refund may exceed the
`portion of the tax paid within the period pre-
`scribed in subsection (b)(2) or (c), whichever is ap-
`plicable, to the extent of the amount of the
`overpayment attributable to the deductibility of
`items described in this paragraph.
`
`

`

`12
`
`TAHA v. UNITED STATES
`
`Id. Under that language, in the case of a claim for refund
`based on a business bad debt, the amount of the refund
`may exceed that described in § 6511(b)(2) (the two-year
`refund limit) for the amount of overpayment attributable
`to the deductibility of the described claim (the bad busi-
`ness debt). See id.
`Because the record on the dismissal motion left a
`genuine issue as to whether the debt was a business bad
`debt described in 26 U.S.C. § 166, Taha, 137 Fed. Cl. at
`468, the Claims Court could not properly invoke § 6511(a),
`(b) to make unnecessary a resolution of the factual issues
`as to the time of filing, and disallowance, of the 2003
`claim.
`
`CONCLUSION
`We hold that the Claims Court lacks jurisdiction over
`the 2002 and 2004 claims because Appellants did not
`commence their action within two years of the IRS first
`disallowing those claims. We therefore affirm the judg-
`ment of the Claims Court with respect to the 2002 and
`2004 claims. The Claims Court, however, erred by not
`making sufficient factual findings concerning the 2003
`claim for this court to meaningfully review its jurisdiction
`determination. Accordingly, we vacate the judgment of
`the Claims Court with respect to the 2003 claim, and
`remand for further proceedings in accordance with this
`opinion.
`AFFIRMED-IN-PART, VACATED-IN-PART, AND
`REMANDED
`COSTS
`
`No costs.
`
`