Refund Lawsuit Precluded Informal Refund Claim

(Parker Tax Publishing April 2026)

The Federal Circuit affirmed the Court of Federal Claims and held that a taxpayer who sent letters to the IRS requesting refunds, and then filed suit for a refund after the IRS requested additional information, could not claim that he filed an informal refund with the IRS. The court found that a successful informal refund claim requires that a taxpayer perfect the informal filing with a technically compliant filing, and filing suit for a refund on an unperfected informal claim removed the claim from the IRS's authority, thereby thwarting the possibility of perfection. Williams v. U.S., 2026 PTC 59 (Fed. Cir. 2026).

Facts

Geoffrey Williams did not file federal income tax returns for tax years 2006 and 2010. As a result, in 2012, the IRS prepared substitute tax returns for him, which indicated that Williams owed $2,982 in tax for 2006 and $22,789 for 2010. Over the next several years, Williams did not pay the IRS-specified amounts due, and interest and penalties accrued.

In June 2020, the IRS mailed to Williams, at a Waco, Texas address, a notice stating that it had not received his tax returns for 2006 and 2010, asking that he file the returns and pay any tax due. Williams mailed a return-addressed response the next month, but his mailing did not include the requested tax returns or payments, and it was not received by the appropriate IRS officials. In August 2020, the IRS issued a notice to Williams of its intent to levy on his assets for unpaid tax, interest, and penalties, which totaled more than $50,000. However, the IRS sent the notice, not to Williams's Waco address, but to a Dallas post office box it had reason to associate with Williams. But it turned out that Williams no longer had access to the post office box, and the notice was returned as undeliverable.

The following January, the IRS sent to Williams's Waco address a Notice of Levy, which Williams did receive. The IRS levied on his bank account the next month, seizing almost $12,000. After contacting the IRS to determine why he never received a Notice of Intent to Levy, Williams requested a hearing to dispute the levy pursuant to Code Sec. 6330. Although Williams's request fell well outside the 30-day statutory period for requesting a hearing, as prescribed in in Code Sec. 6330(a), the IRS offered an "administratively equivalent hearing." At that hearing, Williams argued that he did not owe the assessed tax because he never received the Notice of Intent to Levy. The IRS nevertheless sustained the levy.

In May 2022, Williams paid the full amount due and sent the IRS two one-page letters (the May 2022 letters), each under the header "Demand Claim for Refund," requesting the return of "taxes, interest and penalties erroneously paid under duress." The May 2022 letters identified Williams by name, social security number, and his Waco street address, and they were identical except that one concerned tax year 2006 while the other concerned tax year 2010. In each letter, Williams asserted that he "did not provide a tax return for the tax year," and that "the IRS has no [a]uthority to create a substitute tax form," and that the IRS failed to follow its own procedures in giving notice of intent to levy.

In its response, the IRS informed Williams that he would have to request reconsideration of the substitute tax returns by filing original returns for the tax periods at issue, and instructed him to send a signed Form 1040 for each period so that the IRS could consider his claims. Williams did not file the requested returns and instead, in March 2024, sued the government in the Court of Federal Claims for a tax refund, arguing that the IRS's preparation of substitute tax returns was unauthorized and that the collection of tax based on the substitute tax returns was "fraudulent" and violated numerous Code provisions. The complaint further alleged that the IRS intentionally concealed the asserted violations "for financial gain," which was "criminal." He demanded the return of the payments he had made, civil damages under Code Sec. 7433, payment for time spent preparing the lawsuit, punitive damages, and interest.

In response, the government filed a motion to dismiss for lack of subject-matter jurisdiction, arguing that the Federal Claims Court had no jurisdiction over William's refund claim under Code Sec. 7422 because the statute requires that a refund claim be "duly filed with the Secretary" before it can be the subject of a suit. According to the government, Williams's May 2022 letters were not "duly filed" because they did not comply with the IRS's requirements for refund claims, including that such claims be presented on a version of Form 1040. Additionally, the government argued that all of Williams's claims were founded on allegations of tortious or criminal activity over which the Federal Claims Court had no jurisdiction The Federal Claims Court granted the motion to dismiss after determining that Williams did not file valid administrative claims for refunds as he never filed a Form 1040 for 2006 or 2010. The court also observed that it lacked jurisdiction over claims alleging tortious and criminal conduct.

Williams appealed to the Federal Circuit, where he argued that (1) the IRS lacked the legal authority to prepare a substitute Form 1040 for a person who had not filed a tax return, and (2) the collection of tax was improper due to procedural defects, including the IRS's failure to update Williams's address of record to match his mailing address and its failure to send a notice of intent to levy to the correct address.

Analysis

The Federal Circuit affirmed the Federal Claims Court and held that Williams failed to satisfy the Code Sec. 7422 requirement that his refund claim be "duly filed with the Secretary." With respect to the claims of tortious and criminal conduct, the Federal Circuit also dismissed those claims for lack of subject-matter jurisdiction.

Timeliness, the Federal Circuit observed, is a requirement of determining if a claim is "duly filed" and it has held, under Code Sec. 7422, that the "fact of filing" a timely refund claim is jurisdictional, while the "adequacy of the filing" is not. According to the court, an adequate filing, though not a matter of jurisdiction, is necessary, and failure to meet that requirement is a ground for dismissal.

In applying Code Sec. 7422, the court noted that it has recognized a "substantial variance doctrine" which permits consideration of a claim for refund despite a failure to timely file detailed formal claims with the IRS. But, the court observed, this doctrine applies only in four limited situations and, in two of those there must be a technically compliant claim timely filed with the IRS, which did not happen in this case. The other two situations, the court said, involve (1) the "waiver doctrine," which applies where a claimant has filed a noncompliant refund claim but the IRS has seen fit to dispense with the formal requirements and to examine the merits of the claim, and (2) the "informal claim doctrine," which applies when a timely claim with purely formal defects fairly apprises the IRS of the basis for the claim, and is later "perfected" by an untimely but otherwise technically compliant filing. But, the court said, filing suit for a refund on an unperfected informal claim removes the claim from the authority of the IRS, thereby thwarting the possibility of perfection. The court concluded that is what occurred in this case: Williams never filed compliant claims while the IRS was still considering his May 2022 letters, and once he filed suit it was too late.

For a discussion of the jurisdiction and timing of refund claims, including the "duly filed" requirement under Code Sec. 7422, see Parker Tax ¶261,190.

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