SALCIDA v. USA

In the United States Court of Federal Claims
No. 23-1048
(Filed: January 30, 2026)
(NOT FOR PUBLICATION)
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JOHN SALCIDA, 	*
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Plaintiff, 	*
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v. 	*
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THE UNITED STATES, 	*
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Defendant. 	*
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John A. Salcida, pro se, of San Diego, CA.
Elizabeth Villareal, Trial Attorney, Court of Federal Claims Section, Tax Division, U.S.
Department of Justice, with whom were David A. Hubert, Deputy Assistant Attorney General,
David I. Pincus, Chief of Court of Federal Claims Section, all of Washington, D.C., for
Defendant.
MEMORANDUM OPINION AND ORDER
SOMERS, Judge.
After this Court dismissed his case on June 13, 2024, Plaintiff John Salcida filed two
motions for reconsideration and a motion for costs and fees. Specifically, Plaintiff challenges
this Court’s determination that he failed to state a claim regarding COVID-19 refunds and an
education tax credit allegedly owed to him by the IRS. In response, the government opposed
both motions for reconsideration and the motion for costs and fees. For the reasons explained
below, the Court denies Plaintiff’s motions for reconsideration and grants in part Plaintiff’s
motion for costs and fees.
BACKGROUND
A. 	Plaintiff’s Initial Claim
On July 7, 2023, Plaintiff filed a complaint in this Court alleging that the Internal
Revenue Service (“IRS”) failed to disburse two COVID-19 tax refunds and an education tax
credit to him. ECF No. 1. The IRS had allegedly mailed Plaintiff two letters concerning an
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education credit and a COVID-19 refund, informing him that he was entitled to $1,800 for each.
ECF No. 1-1 at 2, 5. However, according to Plaintiff, he only received one check for $1,800,
rather than the two he expected. ECF No. 1 at 1–2. Plaintiff later received an IRS letter
adjusting the education credit from $1,800 to $1,000, but he allegedly never obtained the reduced
refund. ECF No. 9 at 2. The government moved to dismiss Plaintiff’s claim on the basis that the
IRS had already paid Plaintiff all that it owed him. See generally ECF No. 17. The IRS
provided Plaintiff’s account transcripts in support of its motion and stated that it had paid
Plaintiff $1,800 total in COVID-19 refunds in 2020—divided into a $1,200 and a $600
payment—but did not owe him a $1,800 education credit. Id. at 3 –5; ECF No. 17-1 at 5–8.
In response to the government’s motion, Plaintiff argued that the IRS transcripts the
government provided, which showed several refunds followed by cancellations, were unreliable.
ECF No. 20 at 2. Plaintiff then filed an amended complaint on October 24, 2023, reiterating that
the IRS owed him the education credit and claiming another COVID-19 refund of $1,800. ECF
No. 22 at 2–3. The government moved to dismiss Plaintiff’s amended complaint on November
7, 2023. See generally ECF No. 23. Therein, the government explained that the IRS had sent
Plaintiff a second COVID-19 refund of $1,400 in 2021 but that by law Plaintiff was only
permitted a refund of up to $1,400—not the $1,800 that Plaintiff claimed. Id. at 3–4; ECF No.
23-1 at 11. The government also stated that Plaintiff received an education credit plus interest
for 2022, but under law, the credit could not exceed $1,000. ECF No. 23 at 5–6; ECF No. 23-1
at 14 (showing $1,033.87 issued October 16, 2023). Thus, in total, the IRS claimed that it had
paid Plaintiff $1,800 and $1,400 for two COVID-19 refunds in 2020 and 2021, respectively, and
a $1,000 education credit in 2022. ECF No. 23-1 at 11, 14; ECF No. 17 at 3–4; ECF No. 23 at 6.
In this motion to dismiss, the government referenced Plaintiff’s 2020-2022 account
transcripts, which were accompanied by a declaration from an IRS attorney as to their accuracy.
See generally ECF No. 23; ECF No. 23-1 at 1–3 (declaration of Jennifer Brooker). Despite the
tax transcript and supporting declaration, on February 6, 2024, the Court ordered the government
to provide supplemental briefing on whether Plaintiff had received the $1,400 COVID-19 refund
because the 2021 transcript showed an account balance of -$1,400, among several credits and
cancellations. ECF No. 29 at 1 & n.2. In reference to the $1,000 education credit, the Court
requested an updated 2022 transcript because the Court was concerned that it may have the same
issues (several refunds followed by cancellations) as the 2021 transcript, suggesting that Plaintiff
might not have received the $1,000 education credit because it had been cancelled. Id. at 1–2.
On February 29, 2024, the government filed a supplemental brief explaining that the
2021 transcript showed a cancelled $1,400 COVID-19 tax payment because it was a duplicate of
the $1,400 COVID-19 refund that Plaintiff had already received. ECF No. 30 at 2; ECF No. 30-
1 at 5–7. The government also provided an updated 2022 transcript, which showed that the IRS
had not cancelled the $1,000 education credit payment. ECF No. 30 at 3; ECF No. 30-1 at 11–
12.
Based on the government’s supplemental briefing, the Court issued an opinion on June
13, 2024, granting the government’s motion to dismiss. See generally ECF No. 32. The Court
found that Plaintiff failed to state a claim under Rule 12(b)(6) of the Rules of the United States
Court of Federal Claims (“RCFC”) because he had received all the relief to which he was
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entitled. Id. at 6–7. The Court determined that the government had sufficiently demonstrated
that Plaintiff had already received two COVID-19 refunds of $1,800 and $1,400 in 2020 and
2021, respectively, and one $1,000 education credit in 2022, evidenced by Plaintiff’s account
transcripts. Id. at 6–8. Because the IRS’s transcripts were verified by declaration and Plaintiff
did not present reliable evidence of their untruthfulness, the Court presumed them correct. Id. at
6.
B. 	Plaintiff’s First Motion for Reconsideration
After the Court dismissed his case, Plaintiff filed a motion for reconsideration. ECF No.
34. First, Plaintiff alleges that his claim to the $1,000 education credit is no longer moot because
he still had not received the refund from the IRS. Id. at 2–3. According to Plaintiff, the state
correctional facility in which he is incarcerated returned the $1,000 check in question to the IRS
upon the request of the IRS. Id. at 4. In support, Plaintiff provides records showing that “he
never received $1,000 [for tax year] 2022 deposited into his trust account.” Id. at 4, 15 –16.
Furthermore, as to the two COVID-19 refunds, Plaintiff states that his 2020 and 2021 transcripts
show a -$600 and -$1,200 balance due, and the IRS also owes him another $1,400. Id. at 8–9.
Plaintiff argues that the transcripts provided by the government are not sufficient evidence that
the IRS has paid him because they show payments that he had not received. Id. at 3, 5.
In its response to Plaintiff’s motion, the government stated that it did not object to
granting Plaintiff’s motion as to the $1,000 education credit because Plaintiff’s most recent 2022
transcript shows that the credit was cancelled. ECF No. 35 at 1–2, 5; ECF No. 35-1 at 2–3.
According to the government, this cancellation occurred on May 30, 2024, ECF No. 37 at 10,
months after the government filed its February 2024 supplemental briefing, ECF No. 35 at 4.
Conversely, the government did object to granting Plaintiff’s motion as to the COVID-19
refunds of $1,800 and $1,400 because the Court already “considered and rejected” those
arguments. ECF No. 35 at 4. To remedy the IRS’s mistake regarding the education credit, the
government requested that the Court reopen the case so that counsel could “recommend to an
authorized delegate of the Attorney General that the United States issue a replacement check” to
settle this matter. Id. at 5.
Up to that point, the government had given the Court three copies of Plaintiff’s 2022
transcript in total—the first on November 7, 2023; the second on February 29, 2024, in response
to the Court’s request for supplemental briefing; and the third in the government’s response to
Plaintiff’s motion for reconsideration on July 16, 2024—each except the last was accompanied
by a declaration attesting to its accuracy. ECF No. 23-1 at 1–3, 13–14; ECF No. 30-1 at 1–3,
11–12; ECF No. 35-1 at 2–3. However, only the third transcript showed the cancellation of the
education credit. ECF No. 35-1 at 2–3; ECF No. 36 at 2–3. Because the Court based its opinion
dismissing Plaintiff’s claims on the transcripts and the declarations verifying the transcripts, the
Court ordered the government to show cause as to: (1) why the Court should not reopen the case
and find for Plaintiff; and (2) why the government submitted two seemingly inaccurate
transcripts. ECF No. 36 at 3. Moreover, the Court stated that the government’s solution to
“recommend to an authorized delegate of the Attorney General that the United States issue
Plaintiff a replacement check” was an insufficient remedy due to the government’s significant
errors. Id. (emphasis in original).
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In its response to the show cause order, the government explained that the transcripts
previously provided to the Court did not show that Plaintiff’s check was cancelled because the
cancellation did not occur and thus did not appear on Plaintiff’s 2022 transcript until May 30,
2024. ECF No. 37 at 10. According to the government, even though the July 16, 2024,
transcript shows that the check was cancelled on October 23, 2023, it was actually cancelled on
May 30, 2024. Compare ECF No. 35-1 at 3, with ECF No. 37 at 10. The cancellation date
reflects October 23, 2023, because “[t]ransaction reversals are always posted with the same
‘transaction date’ as the original transaction . . . . Because the ‘transaction date’ of the original
refund was October 23, 2023, the ‘transaction date’ of the of the cancellation also had to be
October 23, 2023.” ECF No. 37 at 7 (also explaining the “transaction date” is the date of the
refund’s effectiveness rather than the date of issuance). Therefore, the November 13, 2023, and
February 19, 2024, transcripts “would not and could not have reflected that ‘cancellation’
because it had not yet occurred.” Id. at 8. The government’s mistake occurred because (1) the
correctional facility returned the $1,000 check to the IRS for review under the IRS’s Blue Bag
Program; and (2) the IRS failed to place a litigation freeze on his account. Id. at 8– 9. Because of
the latter oversight, the IRS “selected plaintiff’s 2022 tax return for further examination.” Id. at
9. Consequentially, the IRS froze all refunds during the examination. Id. On February 21,
2024, an IRS employee analyzed Plaintiff’s check, which was returned to the IRS by the prison
as part of the Blue Bag Program and indicated that the October 16, 2023, check was an erroneous
refund. Id. at 9–10. The refund check was then sent to another IRS office, where the
cancellation was entered on May 30, 2024. Id. at 10. The government explains that, until May
30, 2024, “neither defendant’s counsel nor anyone in the IRS Office of Chief Counsel had any
knowledge that the check had been returned by the prison, referred to the IRS Return Integrity
and Verification Operation, or was scheduled to be cancelled.” Id. Despite this error, the
government opposed entering judgment for Plaintiff because the IRS had requested and
deposited the authorized concession check into Plaintiff’s inmate trust account before the Court
issued the show cause order. Id. at 11 –12.
C. 	Plaintiff’s Motion for Costs and Fees
On January 22, 2025, Plaintiff moved the Court to award him costs and fees. ECF No.
40. He alleges that his costs and fees total $930, divided as follows: a $350 filing fee, a $250
payment to a “[p]ara-investigator” for documentation services, and a $300 payment to an
“[i]nmate [p]aralegal.” Id. at 1. The remaining $30 in costs relate to “postage and xerox
cost[s].” Id. On February 5, 2025, the government asked the Court to deny Plaintiff’s motion
for costs and fees because Plaintiff is not the “prevailing party” in this action under RCFC 54.
ECF No. 41 at 2. Rather, the government argues that it has prevailed “with respect to most of the
amount in controversy and the majority of the issues in [this] case.” Id. at 3. On March 12,
2025, Plaintiff replied to the government, arguing that he is the “prevailing party” mainly
because the government (1) agreed to pay Plaintiff the $1,000 education credit without requiring
a court order; and (2) was able to secure a favorable judgment due to its erroneous declarations.
ECF No. 43 at 2.
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D. 	Plaintiff’s Second Motion for Reconsideration
On June 9, 2025, Plaintiff filed a second motion for reconsideration, which rehashes most
of the arguments made in the first. ECF No. 44. Therein, Plaintiff alleges that, at a settlement
conference, an IRS employee admitted that the IRS still owes Plaintiff a $1,400 COVID-19
refund for 2021 and an $1,800 education credit for 2022, which constitutes “new evidence” that
warrants reconsideration and demonstrates the government’s “fraud.” Id. at 2– 3. Plaintiff also
provides updated costs totaling $1,550: a $350 filing fee and $1,200 “incurred prosecuting this
suit and the government raise [sic] evidence cost covers paralegal and agent power of attorney
fees” to be paid via direct deposit. Id. at 6. Plaintiff further seeks “punitive or exemplary
damages of $15,000” from three IRS employees. Id.
On June 19, 2025, the government responded to Plaintiff’s motion. ECF No. 45. The
government argues that Plaintiff’s alleged evidence is not new because it is not credible, was not
“in existence at the time of the trial,” and is inadmissible under the Federal Rules of Evidence.
Id. at 4– 5. The government also references its explanation regarding the erroneous tax
transcripts to demonstrate the lack of fraud. Id. at 5 (citing its prior briefing on this matter in
ECF No. 37). Plaintiff’s reply on July 11, 2025, does not meaningfully respond to the
government’s arguments and otherwise rehashes arguments previously considered by the Court.
See ECF No. 46.
DISCUSSION
A. 	Legal Standard
1. 	Motion for Reconsideration
RCFC 59 and RCFC 60 govern motions for reconsideration of a final judgment. Because
prevailing on a motion for reconsideration requires the moving party to make a “showing of
extraordinary circumstances,” this Court does not often grant such motions. Fru-Con Constr.
Corp. v. United States, 44 Fed. Cl. 298, 300 (1999). To meet this high standard, the moving
party typically must show under RCFC 59 “an intervening change in the controlling law, newly
discovered evidence, or a need to correct clear factual or legal error or prevent manifest
injustice.” Biery v. United States, 818 F.3d 704, 711 (Fed. Cir. 2016). And under RCFC 60:
[T]he court may relieve a party . . . from a final judgment, order, or proceeding for
the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2)
newly discovered evidence that, with reasonable diligence, could not have been
discovered in time to move for a new trial under RCFC 59(b); (3) fraud (whether
previously called intrinsic or extrinsic), misrepresentation, or misconduct by an
opposing party; (4) the judgment is void; (5) the judgment has been satisfied,
released, or discharged; it is based on an earlier judgment that has been reversed or
vacated; or applying it prospectively is no longer equitable; or (6) any other reason
that justifies relief.
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RCFC 60(b)(1)–(6). However, even if the moving party meets the high standard for
reconsideration, “[t]he decision whether to grant reconsideration lies largely within the
discretion” of the Court. Yuba Nat. Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed. Cir.
1990). Moreover, the Court must exercise its discretion based upon the principle that
“[r]econsideration of a judgment is not intended to permit a party to retry the allegations
included in plaintiff’s complaint when it previously was afforded a full and fair opportunity to do
so.” Hymas v. United States, 141 Fed. Cl. 735, 738 (2019).
Additionally, the Court will deny a party’s motion if the underlying claim is moot.
Cardpool, Inc. v. Plastic Jungle, Inc., 817 F.3d 1316, 1324 (Fed. Cir. 2016) (“Whenever an
action loses its ‘character as a present live controversy’ during the course of litigation, federal
courts are required to dismiss the action as moot.” (quoting Allard v. DeLorean, 884 F.2d 464,
466 (9th Cir. 1989))). In tax cases, “[a] case becomes moot when a claimant receives all her
requested relief.” Mote v. Wilkie, 976 F.3d 1337, 1341 (Fed. Cir. 2020); see also Jarrett v.
United States, 79 F.4th 675, 679–80 (6th Cir. 2023) (“[T]he IRS’s refund check mooted this
case . . . . By law, the IRS pays the refund when it mails the original check.”). Unpaid
byproducts of a suit, such as court fees, do not bar a determination of mootness. See Russell v.
United States, 661 F.3d 1371, 1375 (Fed. Cir. 2011) (“[W]hen a court seeks to determine
whether a plaintiff's claim is moot because the claim has been satisfied, the proper focus is on
whether the plaintiff's principal claim has been resolved, not on whether ancillary expenses, such
as court costs . . . have been paid or have accrued.”).
2. 	Award of Costs and Fees
RCFC 54 allows the Court to award costs and fees when appropriate. RCFC 59(d); see
also Fru-Con, 44 Fed. Cl. at 315 (permitting defendant to recover costs after ruling on a motion
for reconsideration). Costs other than attorneys’ fees “should be allowed to the prevailing party
to the extent permitted by law.” RCFC 54(d)(1). In most cases, the relevant law is the Equal
Access to Justice Act (“EAJA”), 28 U.S.C. § 2412; however, the Internal Revenue Code’s
version of EAJA applies in tax cases, I.R.C. § 7430. See Whalen v. United States, 107 Fed. Cl.
775, 776 (2012) (explaining that I.R.C. § 7430 is “[t]he Internal Revenue Code analog to the
EAJA”).
Section 7430 allows awarding litigation costs to “the prevailing party” in the action.
I.R.C. § 7430(a)(2). To qualify as a prevailing party under section 7430, and thus recover costs
through RCFC 54, “a taxpayer must show that: (1) it substantially prevailed . . . ; (2) the
Government’s position was not substantially justified; and (3) statutory net-worth requirements
are met.” BASR P’ship v. United States, 130 Fed. Cl. 286, 292 (2017), aff’d, 915 F.3d 771 (Fed.
Cir. 2019). In determining the prevailing party, the Court will consider whether its decision
“effects or rebuffs a plaintiff’s attempt to effect a ‘material alteration in the legal relationship
between the parties,’” Raniere v. Microsoft Corp., 887 F.3d 1298, 1306 (Fed. Cir. 2018) (quoting
CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419, 431 (2016)), “by modifying one party’s
behavior in a way that directly benefits the opposing party,” Shum v. Intel Corp., 629 F.3d 1360,
1367 (Fed. Cir. 2010) (internal quotations omitted); see also B.E. Tech., L.L.C. v. Facebook, Inc.,
940 F.3d 675, 678 (Fed. Cir. 2019) (“A decision with judicial imprimatur is required to give rise
to prevailing party status.”).
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A party can be deemed prevailing even if its case is mooted or otherwise dismissed on
procedural grounds. See B.E. Tech., 940 F.3d at 679 (finding that defendant was prevailing party
in patent infringement action and entitled to an award of costs, though action was dismissed as
moot, because the suit “rebuffed [the plaintiff’s] attempt to alter the parties’ legal relationship”);
see also CRST, 578 U.S. at 420 (“A favorable ruling on the merits is not a necessary predicate to
find that a defendant is a prevailing party.”).1 Moreover, “a party is not required . . . to prevail
on all claims in order to qualify as a prevailing party under Rule 54.” Shum, 629 F.3d at 1367–
68; see also Kemin Foods, L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V., 464 F.3d 1339,
1348 (Fed. Cir. 2006) (“While [Defendant] prevailed on some issues, we conclude that on the
whole [Plaintiff’s] success in the litigation was sufficiently clear [to find] that [Plaintiff] was the
prevailing party and [to decline] to apportion costs.”). Rather, the party must have “substantially
prevailed with respect to the amount in controversy” or “substantially prevailed with respect to
the most significant issue or set of issues presented.” I.R.C. § 7430(c)(4)(A)(i).
However, “[a] party shall not be treated as the prevailing party . . . if the United States
establishes that the position of the United States in the proceeding was substantially justified.”
I.R.C. § 7430(c)(4)(B)(i). “For a court to conclude that the United States’ position was
substantially justified, the position must be justified to a degree that could satisfy a reasonable
person,” Adkins v. United States, 154 Fed. Cl. 290, 300 (2021) (internal quotations omitted), and
“substantial evidence” must support its position, Larsen v. United States, 39 Fed. Cl. 162, 168
(1997).
Finally, section 7430 only allows an award of “reasonable litigation costs incurred in
connection with such court proceeding.” I.R.C. § 7430(a)(2). “Reasonable litigation costs”
include— “(A) reasonable court costs, and (B) based upon prevailing market rates for the kind or
quality of services furnished . . . (iii) reasonable fees paid or incurred for the services of attorneys
in connection with the court proceeding . . . .” I.R.C. § 7430(c)(1). But the Court has discretion
to “determine what fee is ‘reasonable’” to award the prevailing party. See, e.g., Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983). The Court may not award costs and fees if they are
unsupported by documentation. Id. at 433 (“Where the documentation of hours is inadequate,
[the court] may reduce the award accordingly.”); see also Sabella v. HHS, 86 Fed. Cl. 201, 211
(2009) (“The burden, however, is on [the plaintiff] to show that . . . proper documentation of the
hours expended and hourly rates has been submitted.”) (citation omitted).
1 Although fees in B.E. Tech, a patent case, were governed by 35 U.S.C. § 285 and in
CRST, a civil rights suit, by EAJA, “Congress has included the term ‘prevailing party’ in various
fee-shifting statutes, and it has been the Court’s approach to interpret the term in a consistent
manner.” CRST, 578 U.S. at 422 (citing Buckhannon Bd. & Care Home, Inc. v. West Virginia
Dept. of Health and Hum. Res., 532 U.S. 598, 602–03, and n.4 (2001)); B.E. Tech., 940 F.3d at
677 (“We interpret the term [‘prevailing party’] consistently between different fee-shifting
statutes [] and between Rule 54(d) and 35 U.S.C. § 285.” (internal citations omitted)).
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B. 	Analysis
1. 	Motions for Reconsideration
Although, based on the government’s response to Plaintiff’s first motion for
reconsideration, it appears that the Court should not have dismissed Plaintiff’s claim as to the
$1,000 education credit,2 the Court must nonetheless deny Plaintiff’s motions for reconsideration
for two reasons. First, Plaintiff’s motions concerning the $1,000 education credit are now moot,
because Plaintiff has received the $1,000 to which he is entitled under the education credit
provision. See, e.g., Uzuegbunam v. Preczewski, 592 U.S. 279, 282 (2021) (“[I]f in the course of
litigation a court finds that it can no longer provide a plaintiff with any effectual relief, the case
generally is moot.”). Second, to the extent that Plaintiff’s motions make arguments unrelated to
the $1,000 education credit issue, Plaintiff has not met the requirements for reconsideration as to
these arguments.
First, Plaintiff’s motions for reconsideration are now moot as to the $1,000 education
credit. The IRS resent the education credit payment to Plaintiff on December 17, 2024, and his
correctional facility confirmed that it was deposited in Plaintiff’s inmate trust account on January
2, 2025. ECF No. 37 at 11 –12. Except with regard to the now deposited $1,000 education credit,
Plaintiff’s motions do nothing to disturb the Court’s earlier findings. In sum, as of June 18,
2025, Plaintiff has received all the relief he sought in his motions for reconsideration and to
which he is entitled by tax law: an $1,800 COVID-19 refund, a $1,400 COVID-19 refund, and a
$1,000 education tax credit. See ECF No. 45-1 at 16–20; see also ECF No. 23 at 2–4.
Second, to the extent that Plaintiff’s motions are not moot, Plaintiff has not met the
requirements of RCFC 60(b) for reconsideration. First, Plaintiff has not presented “newly
discovered evidence” under RCFC 60(b)(2). Plaintiff alleges in his second motion for
reconsideration that in a settlement conference related to his case in Tax Court, “the IRS Appeals
Officer ‘admitted’ that the IRS owed [Plaintiff] for the 2021 tax year $1,400 for COVID-related
credits and $1,800 for education credits . . . .” ECF No. 45 at 3 (quoting ECF No. 44 at 2). The
government states, and the Court agrees, that this “evidence” fails under RCFC 60(b)(2) for three
reasons. See ECF No. 45 at 4. First, this evidence did not exist at the time of the Court’s
decision. Id.; see 11 WRIGHT & M ILLER ’S FEDERAL P RACTICE & P ROCEDURE § 2859 (3d ed.
2025). The Court dismissed Plaintiff’s case in June 2024, see ECF No. 32, and the alleged
settlement conference did not occur until May 2025, see ECF No. 44 at 2. Second, “none of
what plaintiff is alleging is admissible evidence” because Plaintiff seeks to produce “statement[s]
made during compromise negotiations” in order to “prove or disprove the validity . . . of a
disputed claim.” ECF No. 45 at 4 (citing FED. R. EVID. 408(a)). Finally, Plaintiff’s statements
are wholly unsubstantiated; an IRS Appeals Officer likely did not “admit” that the IRS owed
Plaintiff an $1,800 education credit because relevant tax law does not allow Plaintiff to obtain
more than $1,000 in education credits. ECF No. 45 at 4–5; ECF No. 44 at 2; see also ECF No.
2 The government did not oppose granting reconsideration because “Plaintiff’s 2022
account transcript currently shows a $1,000 balance due to [P]laintiff,” and the transcript it
provided during litigation did not show the cancellation. See ECF No. 35 at 4, 6.
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32 at 7. Plaintiff’s updated 2022 account transcript likewise does not indicate the $2,500 in
COVID-19 refunds that he claims remain unpaid. ECF No. 45 at 5; see ECF No. 44 at 4.
Plaintiff has also not shown the requisite fraud, misrepresentation, or misconduct by an
opposing party to prevail on a motion under RCFC 60(b)(3). The November 13, 2023, and
February 19, 2024, transcripts that the IRS provided to verify that Plaintiff received his $1,000
education credit for tax year 2022 were inaccurate because they did not “reflect[] [the]
‘cancellation’ because it had not yet occurred.” ECF No. 37 at 8. The IRS should have
proceeded more carefully with its filings in this case and must better scrutinize its filings in this
Court and others in the future. However, although mistaken, the government’s actions are not
tantamount to fraud; the IRS did not knowingly deprive Plaintiff of his education tax credit to his
detriment. See Fraud, B LACK’S LAW DICTIONARY (12th ed. 2024) (defining fraud as a “knowing
misrepresentation or knowing concealment of a material fact made to induce another to act to his
or her detriment”). Rather, the IRS’s failure to pay Plaintiff appears to be a mistake that it later
corrected. See ECF No. 37 at 11–12.
Finally, Plaintiff has not met the high standard of RCFC 60(b)(6) by showing
“extraordinary circumstances” that warrant granting reconsideration, as Plaintiff’s arguments for
reconsideration are a combination of unavailing arguments and rehashing of already rejected
arguments. Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 864 (1988). Plaintiff’s
only valid ground for reconsideration has been rendered moot by the IRS’s subsequent corrective
action. Accordingly, Plaintiff’s motions for reconsideration are denied.
2. 	Award of Costs and Fees
Plaintiff has also moved for an award of costs and fees. In his motion, Plaintiff moves
for $930 in costs and fees, which includes the $350 court filing fee, a $250 payment to a “Para-
investigator . . . to secure documents,” and a $300 payment to an “Inmate Paralegal.” ECF No.
40 at 1. The remaining $30 is allocated to “postage and xerox cost[s].” Id. He later alleges in
his Second Motion for Reconsideration that he has incurred a total of $1,550 in litigation costs.
ECF No. 44 at 6. Although most of his alleged costs and fees are not reasonable nor
documented, the Court does find that Plaintiff is a prevailing party under RCFC 54 and section
7430(c)(4). Thus, for the reasons explained below, Plaintiff is entitled to an award of reasonable
litigation costs.
First, Plaintiff substantially prevailed on his first motion for reconsideration regarding the
$1,000 education credit, as it appears that this motion directly led to Plaintiff finally receiving
(without cancellation) the money to which he was entitled. Plaintiff argued in his first motion
for reconsideration that he did not receive the $1,000 education credit as reflected on his 2022
account transcript, supported by documentation from his correctional facility. See ECF No. 34 at
2–3, 15–16. Plaintiff’s motion caused the IRS to realize that Plaintiff never received the $1,000
credit because the check was cancelled, and Plaintiff was still entitled to payment. See ECF No.
35 at 1–2; see also ECF No. 37 at 8–11. As is explained above, the only reason that this Court
does not grant Plaintiff’s motions as to this claim is because it is now moot. See ECF No. 37 at
11–12. The government argues that it is “still the prevailing party with respect to 2020, 2021,
and an $800 portion of plaintiff’s original 2022 claim for $1,800. Defendant has therefore
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prevailed with respect to most of the amount in controversy and the majority of the issues in the
case.” ECF No. 41 at 2–3. However, that Plaintiff does not substantially prevail on the total
amount in controversy is not dispositive so long as Plaintiff substantially prevails on the most
significant issue presented. See I.R.C. § 7430(c)(4)(A)(i)(II). The most significant issue
presented in Plaintiff’s motions for reconsideration (specifically in his first motion for
reconsideration) is his new argument concerning the $1,000 education credit in 2022. Because
he prevailed on this issue, he is a “prevailing party” for purposes of section 7430(c)(4)(A)
despite not succeeding on all his claims.
Of course, being a prevailing party under subparagraph (A) alone is insufficient to entitle
Plaintiff to costs and fees because subparagraph (B) additionally provides that a “party shall not
be treated as the prevailing party . . . if the United States establishes that the position of the
United States in the proceeding was substantially justified.” Id. § 7430(c)(4)(B). The
government argues that its litigation position was substantially justified because, at the time it
asserted that Plaintiff had been paid the $1,000 education credit, Plaintiff’s tax transcripts
showed that he had been paid the $1,000 he was owed. ECF No. 30 at 3; ECF No. 30-1 at 11–
12. However, this assertion later proved to be incorrect—Plaintiff never received the $1,000
check because it was intercepted as part of the IRS’s Blue Bag Program. But was the
government substantially justified in making its original assertion? The answer to that question
is clearly “no.”
The government explained to this Court that Plaintiff had been paid all he was owed,
including the $1,000 education credit; presented what turned out to essentially be false evidence
that Plaintiff had been paid; and reassured the Court that Plaintiff had been paid after the Court
asked the government to confirm payment. All of this caused the Court to dismiss Plaintiff’s
case in its entirety. It was only after Plaintiff filed a motion for reconsideration that the
government realized that Plaintiff was not, in fact, paid the $1,000 he was owed. While this
sequence of events may constitute the building blocks for sanctionable conduct, it certainly does
not constitute the blocks upon which substantial justification is built. The government explained
that these failures occurred because the IRS failed to place a litigation freeze on Plaintiff’s 2022
tax account, which would have prevented the cancellation of the $1,000 education credit check.
ECF No. 37 at 9. However, instead of freezing Plaintiff’s account, the IRS selected Plaintiff’s
account for investigation, unaware that it was the subject of litigation, and placed a refund freeze
on the 2022 tax year. Id. The IRS allegedly did not recognize this error until May 30, 2024,
when the refund check was cancelled and Plaintiff’s tax transcript showed a balance of -$1,000.
Id. at 10. But the failure to place a litigation freeze on Plaintiff’s account is not the substantial
justification the government seeks. It is quite the opposite. It is also likely the reason that the
government does not attempt to argue substantial justification in response to Plaintiff’s motion
for costs and fees. See generally ECF No. 41. And because the government carries the burden
to establish substantial justification, its lack of argument on this matter alone suffices to find
against substantial justification here. See I.R.C. § 7430(c)(4)(B)(i) (emphasis added) (“A party
shall not be treated as the prevailing party . . . if the United States establishes that the position of
the United States in the proceeding was substantially justified.”).
Plaintiff has satisfied the remaining requirements for an award of reasonable litigation
costs. Plaintiff meets the net worth requirements, as he is “an individual whose net worth did not
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exceed $2,000,000 at the time the civil action was filed.” I.R.C. § 7430(c)(4)(D). Plaintiff also
has not “unreasonably protracted” the court proceedings. I.R.C. § 7430(b)(3). Ordinarily, “a
‘prevailing party’ must file an appeal to the IRS Appeals Office to exhaust all administrative
remedies to be eligible to recover reasonable litigation costs.” BASR P’ship, 130 Fed. Cl. at 292;
see I.R.C. § 7430(b)(1). However, the IRS failed to raise this argument in its response to
Plaintiff’s motion and, therefore, waives it. See ECF No. 41; Sarro & Assocs., Inc. v. United
States, 152 Fed. Cl. 44, 58 (2021) (“A party’s failure to raise an argument in an opening or
responsive brief constitutes waiver.”). Furthermore, it appears that Plaintiff attempted to resolve
this dispute with the IRS directly before filing suit. See ECF No. 1 at 2 (“The petitioner since
May 2022, has wrote [sic] the IRS at various locations . . . . Now more than 14 months and the
IRS has not issue [sic] a notice of disallowance, has not issue [sic] the check, nor has even care
[sic] to respond to plaintiff’s inquiries . . . .”). Therefore, Plaintiff may obtain reasonable
litigation costs in connection with his motions for reconsideration under I.R.C. § 7430.
However, despite Plaintiff’s status as a prevailing party, only his court filing fee qualifies
as a reasonable cost under I.R.C. § 7430. Of Plaintiff’s requested costs and fees, the filing fee is
the only fee properly documented: the Court granted Plaintiff’s motion to proceed in forma
pauperis and pay a reduced filing fee of $350, which Plaintiff paid and the Court recorded. See
ECF No. 8-1; ECF No. 12. Plaintiff otherwise provides no proof of a $250 payment to a “[p]ara-
investigator . . . to secure documents;” a $300 payment to an “[i]nmate [p]aralegal;” and $30 in
costs for “postage and xerox” in his motion for costs and fees. ECF No. 40 at 1. He also does
not provide any evidence that he spent $1,200 “prosecuting this suit and the government raise
[sic] evidence cost covers paralegal and agent power of attorney fees” in his second motion for
reconsideration. ECF No. 44 at 6. Nor is it likely, had Plaintiff presented any documentation for
these costs, that the Court would find them reasonable. Thus, Plaintiff’s recovery is limited to
the $350 filing fee, as his remaining costs and fees are both undocumented and seemingly
unreasonable.
CONCLUSION
For the foregoing reasons, the Court hereby DENIES Plaintiff’s motions for
reconsideration and GRANTS IN PART Plaintiff’s motion for an award of litigation costs.
Specifically, Plaintiff is awarded taxable costs in the amount of $350.00. The Clerk shall enter
JUDGMENT accordingly.
IT IS SO ORDERED.
s/ Zachary N. Somers
ZACHARY N. SOMERS
Judge
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