Unreported / Non-Citable
Background
Linda O. Macaraeg, representing herself, sued the United States in the Southern District of California seeking refunds of alleged tax overpayments for tax years 2009 and 2010, and she moved for leave to proceed in forma pauperis. The facts below come from her complaint and were taken as true at this preliminary stage; the court did not make final findings on them. According to the complaint, the IRS prepared substitute returns around March 2013 and assessed about $59,694 for 2009 and $104,467 for 2010, including a 10 percent penalty for early withdrawals from a retirement account. She filed her own returns in July 2013, which reduced the assessments, and on December 27, 2022 she paid $42,665.78 for 2009 and $78,288.78 for 2010.
She alleges that she later learned she was exempt from the early-withdrawal penalty because she was permanently disabled when the distributions were taken. In 2023 she filed Forms 1040X amending both returns, which showed refunds of $8,120 for 2009 and $10,670 for 2010. She contacted the IRS in January 2024, was told in February 2024 that she would be contacted within 60 days, and says she has received neither a response nor a refund. She filed this action on April 23, 2026.
The Court’s Holding
The court granted the in forma pauperis motion. Applying Adkins v. E.I. DuPont de Nemours and the Ninth Circuit's Escobedo decision, it asked whether paying the $405 filing fee would leave her unable to afford the necessities of life. She reported income of $4,216 for April 2026 but expected a $1,200 monthly drop from lost rental revenue, leaving about $3,016 against claimed expenses of $3,133, a shortfall of $117. The court found she could not pay the fee and still afford life's necessities.
The court then screened the complaint under 28 U.S.C. section 1915(e)(2), using the same plausibility standard that governs a Rule 12(b)(6) motion. It identified five elements of a refund suit and found each adequately alleged: the IRS collected more than it was owed, measured by the claimed $8,120 and $10,670; she paid the assessments in full before suing, as Flora v. United States requires; she filed refund claims within two years of payment under section 6511(a); she sued more than six months after filing the claims, which section 6532(a)(1) permits where the IRS has neither allowed nor denied them; and the Forms 1040X were signed, verified under penalty of perjury, and stated the grounds and supporting facts for the refund.
The court concluded that the complaint states a nonfrivolous claim, granted leave to proceed, directed the Clerk to issue a summons, and told Plaintiff to serve the United States under Federal Rule of Civil Procedure 4(i). These were screening determinations only. The court did not decide that she is entitled to any refund, and the government has not yet responded.
Key Takeaways
- A litigant need not be destitute to proceed in forma pauperis; the question is whether paying the filing fee would prevent her from affording life's necessities, and here a monthly deficit of $117 sufficed.
- At screening, a court takes the complaint's allegations as true, so the finding that the refund elements were met reflects plausibility rather than proof.
- The order treats a signed Form 1040X containing a penalty-of-perjury declaration, a stated ground, and supporting calculations as an adequate administrative refund claim for screening purposes.
- Where the IRS has neither allowed nor denied a refund claim, the order treats suit as timely once six months have passed since the claim was filed.
- Granting leave to proceed does not resolve the merits; the government may still contest the claim, including the disability-based entitlement to relief, after service.
Why It Matters
This is an unpublished district court order on a preliminary question, so it has no precedential weight and decides nothing about whether Plaintiff will ultimately recover. Its value is as a practical illustration of how a court applies the combined fee-waiver and screening process to a pro se tax refund complaint, walking through the statutory prerequisites one by one.
What remains open is substantial. The government has not appeared, and it may challenge the facts underlying the disability exception, the timing and sufficiency of the administrative claims, and the amounts owed. The court also relied largely on Court of Federal Claims and out-of-circuit authority for the elements of a refund claim, so the order should be read as a screening-stage assessment rather than a settled Ninth Circuit framework.