A Lesson From Brown v. U.S.: A Defective Tax Refund Filing

The recent case from the U.S. Court of Appeals for the Federal Circuit in Brown v. the U.S. shows the detriments to Taxpayers who do not properly file their returns with the IRS in order to receive their tax refunds. 

Facts of the Case

U.S. Citizens, the Browns, in relevant tax years lived in Australia where Mr. Brown was employed. The Browns’ amended returns for 2015 and 2017 were sent and received to the IRS which were prepared and signed by their attorney. In the returns, the Browns’ claimed the Foreign Earned Income Exclusion claiming approximately $13,000 in refunds. However, despite the returns being signed by their attorney, they were not accompanied by any powers of attorney. 

A second amended return was submitted for 2015 which like the first amended return was prepared and signed by their attorney and claiming the Foreign Earned Income Exclusion. Again, this return was not accompanied by any powers of attorney. 

In April 2019, a letter was sent to the Browns by the IRS disallowing the Browns’ refund claims for 2015 and 2017. The Browns’ filed a refund suit in the Court of Federal Claims where the government argued the Browns had not “duly filed” their returns correctly because they had not personally signed and verified their amended returns or executed a power of attorney authorizing their attorney to execute their returns. The Claims Court agreed with the government and dismissed the Browns’ suit finding that the Browns’ claims did not meet the requirements for a claim to be “duly filed.”

Subsequently, the Browns timely appealed to the U.S. Court of Appeals.

Court’s Ruling and Decision

In its ruling the court held the Browns did not “duly file” their refund claim. According to §7422 to be “duly filed” a claim “must be verified by a written declaration that it is made under the penalties of perjury.” The taxpayer signature requirement may only be exempted if a legal representative certifies a claim and attached evidence of a valid power of attorney. In this case the Browns neither signed their refund claims nor gave powers of attorney to their tax preparer to sign such claims on their behalf. Therefore the Circuit Court affirmed the Claims Court’s opinion affirming the Browns were not owed their tax refunds.

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