Background
Mark Pellegrino, proceeding pro se, sued for a $48,220 refund related to his 2024 federal income-tax return. His return reported no wages, $48,220 in federal tax withheld, and business income from Mark Pellegrino LLC. The IRS initially recorded the claimed withholding credits but later disallowed them because it could not verify receipt of the relevant Forms 1099 or the claimed withholdings. The IRS record consequently reflected a $1,083 tax deficiency.
Pellegrino submitted Forms 1099-B and a corrected Form 1099-MISC that he contended established withholding. The forms did not total the $48,220 claimed on his return, and the court found them unpersuasive. Among other issues, the forms did not identify Pellegrino individually or include his personal taxpayer identification number; instead, the available identifiers corresponded to his LLC or another recipient.
The Court’s Holding
Judge Philip S. Hadji granted the government’s motion to dismiss for lack of subject-matter jurisdiction. A taxpayer bringing a refund action in the Court of Federal Claims must first fully pay the assessed deficiency under Flora. Pellegrino had not paid the $1,083 deficiency reflected in the IRS account, and his argument that the IRS could not eliminate the claimed credits did not satisfy the full-payment requirement.
The court also found the action malicious under 28 U.S.C. § 1915(e)(2)(B)(i), independently requiring dismissal of an action brought by a plaintiff seeking in forma pauperis status. It cited Pellegrino’s prior dismissed refund suit involving unexplained, suspicious transactions tied to entities bearing his name. The court denied his in forma pauperis application and certified that any appeal would not be taken in good faith.
Key Takeaways
- The Court of Federal Claims lacks jurisdiction over a tax-refund claim unless the taxpayer has fully paid the IRS’s assessed deficiency.
- A taxpayer’s claimed withholding credit does not establish payment when the IRS disallows the credit and the taxpayer cannot substantiate that taxes were withheld on the taxpayer’s behalf.
- Repeated refund claims based on unexplained and unsupported transactions may be dismissed as malicious, and may justify denial of in forma pauperis status.
Why It Matters
The decision reinforces that the full-payment rule turns on the IRS’s assessed liability and actual payment, not a taxpayer’s asserted entitlement to withholding credits or refund. Taxpayers disputing disallowed credits must satisfy the jurisdictional payment prerequisite before seeking a refund in the Court of Federal Claims.
It also illustrates the court’s willingness to use Section 1915 to address repetitive litigation built on unsupported tax documentation, including by denying fee-waiver status and certifying that an appeal would not be taken in good faith.