United States District Court, W.D. North Carolina, Charlotte Division
WILLIAM L. ROTH, Plaintiff,
ALCOHOL & TOBACCO TAX & TRADE BUREAU BATF and BATF, Defendants.
C. Mullen United States District Judge.
matter is before the Court upon Defendants' Motion to
Dismiss pursuant to Rule 12(b)(1) and 12(b)(6) of the Federal
Rules of Civil Procedure. The pro se Plaintiff has
filed a response in opposition and the Defendants have filed
a Reply. This matter is now ripe for disposition.
October 5, 2016, Plaintiff William L. Roth filed a complaint
in the General Court of Justice in Mecklenburg, North
Carolina, seeking a refund of firearm and ammunition excise
taxes allegedly paid by a third party to the Alcohol and
Tobacco Tax and Trade Bureau (“TTB”) in the first
quarter of 2005. Defendants filed a timely notice of removal
and the case was removed to this Court on October 24, 2016.
Internal Revenue Code imposes an excise tax on the first
domestic sale of firearms and ammunition manufactured in the
United States. 26 U.S.C. § 4181; 27 C.F.R. § 53.2,
53.61(a), (e). Under certain circumstances,
domestically-manufactured firearms and ammunition may be sold
tax-free for export, or for resale by the purchaser to a
second purchaser for export. See 26 U.S.C. §
4221(a)(2); 27 C.F.R. § 53.133. If the original
manufacturer pays the tax on an article that was subsequently
exported prior to its first taxable use, such payment is
deemed an overpayment by reason of its exportation.
See 27 C.F.R. § 53.178(a), (b). Either the
manufacturer or the exporter of the article may request a
refund in this circumstance. See 26 U.S.C. §
6416(c); 27 C.F.R. § 53.184. If the exporter requests a
refund, the exporter must include with its refund claim a
letter from the manufacturer that waives the
manufacturer's right to claim the refund and that
provides proof of the amount of taxes paid by the
manufacturer. See 27 C.F.R. § 53.184(b).
least 2004 through 2007, Plaintiff Roth owned and operated a
corporation called Operational Support Services, Inc.
(“OSS”). (Doc. No. 7-3, Decl. of Todd Moon, at
¶ 2.) OSS has alleged to TTB that it bought
firearms and ammunition from third party seller(s).
Id. at ¶ 3. OSS allegedly bought the firearms
and ammunition at “tax-included” prices, meaning
that OSS's purchase price included the cost of the
federal tax remitted to TTB by the original manufacturer,
meaning that OSS's purchase price included the cost of
the federal excise tax incurred by the original manufacturer.
Id. OSS then alleged that it exported the firearms
and ammunition outside the United States, and subsequently
requested a refund of the excise taxes. Id.
2007, OSS filed two claims with the TTB for refunds of excise
taxes. Id. at ¶ 4. The administrative claims
were assigned claim numbers MWR-106924 and MWR-109002.
Id. The first claim, MWR-106924, requested a refund
of excise taxes in the amount of $63, 339.55 for tax periods
encompassing 2004 through 2006. Id. The second
claim, MWR-109002, requested a refund of excise taxes in the
amount of $56, 573.74. Id.
12, 2007, TTB denied both claims in full. Id. at
¶ 5; Exhibit A. TTB denied the claims because OSS failed
to provide the required supporting evidence. Id. For
instance, OSS did not provide a statement, signed by the
person who paid the tax, waiving its right to claim a credit
or refund of such tax. Id. OSS also failed to
provide proof of the amount of excise taxes paid by the
manufacturer and the dates that the taxes were paid.
October 5, 2016, Plaintiff Roth filed a Complaint seeking an
“excise tax revenue refund due for the first quarter of
2005.” See Complaint, Doc. No. 1. Plaintiff
states in his Complaint that “Plaintiff paid the excise
tax to ATK, Inc., [w]ho in turn paid the [TTB]. The TTB
audited my records and admitted to plaintiff that they owe me
the refund however they have fail[ed] to pay the funds owed
to the plaintiff.” Id. Plaintiff did not
include a copy of the refund claim(s) that OSS filed with the
TTB as part of his complaint. See id. The TTB has no
record of Plaintiff Roth ever paying excise taxes to the TTB
or filing an administrative claim for refund with the TTB in
his personal capacity. (Doc. No. 7-3, at ¶ 6.)
Federal Rule of Civil Procedure 12(b)(1), a case may be
dismissed for lack of subject matter jurisdiction. When
subject matter jurisdiction is challenged under this rule,
the plaintiff bears the burden of persuasion. Smith v.
Wash. Metro. Area Transit Auth., 290 F.3d 201, 205 (4th
Federal Rule of Civil Procedure 12(b)(6), a case may be
dismissed for failure to state a claim upon which relief can
be granted. To survive a Rule 12(b)(6) motion to dismiss, the
court must determine whether the complaint “provide[s]
enough facts to state a claim that is plausible on its
face.” Sarvis v. Alcorn, 826 F.3d 708, 718
(4th Cir. 2016) (quoting Robinson v. Am. Honda Motor
Co., 551 F.3d 218, 222 (4th Cir. 2009)). In order to
reach facial plausibility, the plaintiff must “plead
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)).
Court will first address Defendants' 12(b)(1) motion.
There is no dispute that Plaintiff Roth never filed an
administrative claim with TTB in his personal capacity. Under
28 U.S.C. § 1346(a)(1), the United States has consented
to be sued in federal district court in civil actions
“for the recovery of any internal revenue tax alleged
to have been erroneously or illegally assessed or
collected.” However, a party bringing such an action
must exhaust its administrative remedies by filing a timely
and proper refund claim prior to filing suit. See 26
U.S.C. § 7422(a) (“No suit . . . shall be
maintained in any court for the recovery of any internal
revenue tax alleged to have been erroneously or illegally
assessed or collected, . . . until a claim for refund . . .
has been duly filed with the Secretary, according to the
provisions of law in that regard….”). The code
requires that the taxpayer first exhaust his administrative
remedies in order to “allow the administrative agency
to act within the sphere of its special competence, to apply
its expertise, … to correct its own errors, and [to]
create a reasonable division of labor between agency and
court.” Kenlin Indus. v. United States, 927
F.2d 782, 786-87 (4th Cir. 1991).
Plaintiff in this refund suit has failed to exhaust his
administrative remedies. The TTB has no record of William L.
Roth ever filing an administrative claim for refund with ...