Polsky v. United States, 844 F.3d 170 (3d Cir. 2016). Plaintiffs are the parents of a permanently disabled daughter. They claimed a child tax credit on two years’ federal tax returns. The Internal Revenue Service disallowed that claim, on the ground that the child was too old to qualify for the credit. Plaintiffs, acting pro se, filed a putative class action challenging that disallowance. The District Court granted the IRS’s motion to dismiss the complaint. Plaintiffs appealed, but the Third Circuit affirmed in a per curiam opinion.
The panel dealt with a preliminary issue in a footnote. Plaintiffs contended that it was improper for the District Court to decide the motion to dismiss before ruling on class certification. The panel disagreed, citing a number of cases. The court also noted that “courts have questioned whether laymen pro se litigants may represent a class.” But there was no need to address class issues, because the District Court’s decision was correct, as the panel went on to discuss.
The child tax credit statute allows taxpayers to claim a credit for a “qualifying child.” 26 U.S.C. §24(c)(1) defines a “qualifying child” as “a qualifying child of the taxpayer (as defined in section 152(c)) who has not attained age 17.” Plaintiffs did not dispute that their daughter was seventeen years old during the two tax years in question. They relied, however, on 26 U.S.C. §152(c) (part of the section incorporated by reference into section 24(c)(1)). That provision contains its own definition of “qualifying child,” for purposes of a taxpayer’s dependency deductions, and includes an exception for a child who is “permanently and totally disabled.” Plaintiffs alleged that their child was permanently disabled.
Relying on plain language, and applying the de novo standard of review applicable to rulings on motions to dismiss, the panel ruled that the language of section 152(c)(3) did not override section 24(c)(1). The latter addresses a tax credit, while the former applies only to a tax deduction. Because the child was concededly seventeen during the relevant years, the tax credit was not available.
Plaintiffs also complained, relying on the Civil Rights Act, 42 U.S.C. §1983, that the IRS had violated their due process rights by failing to issue a deficiency notice. Such a notice would have allowed them to sue in the Tax Court. The panel rejected that argument. First, the Civil Rights Act does not apply to federal actors, such as IRS employees, and neither the IRS nor the United States can be sued under that statute. Second, plaintiffs were not deprived of due process by their inability to sue in the Tax Court. They were protected by their ability to sue for a refund, as a Fifth Circuit case that the panel cited held.