Opinion
No. DKC-01-105
August 27, 2002
MEMORANDUM OPINION
Plaintiff Peter G. Sam brought this action pursuant to Section 7422 of the United States Tax Code seeking a refund of taxes, penalties, and interest paid. The parties consented to referral to a United States Magistrate Judge for all proceedings and final disposition. The United States' motion for partial summary judgment is pending and ready for resolution. No hearing is deemed necessary. Local Rule 105.6 (D. Md.). For the reasons set forth below, the motion will be granted inpart.
1. Background.
In 1995, the United States assessed taxes against Mr. Sam for various quarters from 1992 through 1993, alleging that he employed truck drivers and neglected to pay employment taxes on Forms 940 and 941. Mr. Sam maintains that the drivers were sub-contractors, not employees, and therefore no Form 940 or 941 taxes were owed.
Starting in 1996, Mr. Sam began paying the taxes allegedly owed on a monthly basis. After paying the taxes, interest, and penalties as directed, Mr. Sam filed for a refund on March 24, 2000. When the United States denied the refund, Mr. Sam filed this action.
2. Summary Judgment Standard.
Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. Civ. P. 56(c); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 247-48 (1986); Miller v. Leathers, 913 F.2d 1085, 1087 (4th Cir. 1990). A genuine dispute exists if a reasonable factfinder could return a verdict for the nonmoving party. Anderson, 477 U.S. at 247-48. Only disputes over facts that might affect the outcome of the case under governing law will preclude summary judgment. Id. at 252; Thompson Everett, Inc. v. National Cable Advertising, 57 F.3d 1317, 1323 (4th Cir. 1995).
The moving party bears the initial burden of demonstrating that there is no genuine issue as to any material fact. Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979). The moving party may meet this burden by demonstrating the absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The non-moving party then must, through affidavits or other kinds of evidentiary material listed in Rule 56(c), demonstrate specific facts showing that there is a genuine issue for trial. Id. at 324. The nonmoving party cannot rely on "the mere pleadings themselves," or simply set forth speculation, allegations, or denials to demonstrate genuine issues of fact. Id.
The court must not weigh the evidence. Rather, the court must determine whether enough evidence exists to enable a reasonable factfinder to find in favor of the non-moving party. Anderson, 477 U.S. at 252. The court must view all facts and inferences most favorably to the non-moving party, who is entitled to have the credibility of his evidence assumed, his version of events in dispute accepted, and internal conflicts resolved in his favor. Charbonnages de France, 597 F.2d at 414. However, the non-moving party is only entitled to inferences that "fall within the range of reasonable probability." Thompson Everett, 57 F.3d at 1323.
3. Discussion .
The United States seeks partial summary judgment on two separate grounds. First, it contends that Mr. Sam's claim is limited to the amount sought in the administrative claim for refund. Second, it contends that a portion of the amount sought is barred by the statute of limitations.
The Internal Revenue Code requires that an administrative claim be filed before any civil action for refund may be instituted. 26 U.S.C. § 7422(a). "The claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof." 26 C.F.R. § 301.6402-2(b)(1). A taxpayer cannot present factual or legal issues in a refund suit that were not set forth in the claim for refund. Real Estate Land Title Trust Co. v. United States, 309 U.S. 13, 17-18 (1940); Beckwith Realty, Inc. v. United States, 896 F.2d 860, 862-863 (4th Cir. 1990); Old Dominion Box Co. v. United States, 477 F.2d 340, 345-47 (4th Cir. 1973); Sappington v. United States, 408 F.2d 817, 819-20 (4th Cir. 1969).
Mr. Sam's administrative claims totaled $17,434.64, but he now seeks $24,043.00, and does not respond to the United States' claim that he may not seek the larger amount here. He thus provides neither explanation nor legal authority to support the increase in his claim, and none is apparent. Accordingly, this court may award only the amount set forth in the claim for refund filed with the Internal Revenue Service.
LRS Form 843 — Claim for Refund and Request for Abatement. See Defendant's exhibits A-J.
The United States also asserts that a portion of the claim is barred by the statute of limitations. When, as here, no return was filed by the taxpayer, a request for refund must be filed within two years from the time the tax was paid. 26 U.S.C. § 6511(a). If the request for refund was not timely, the court has no jurisdiction to consider the refund suit. Webb v. United States, 66 F.3d 691, 693-694 (4th Cir. 1995). Therefore, Mr. Sam cannot recover any amounts paid more than two years before he filed the refund request.
The United States now claims that Mr. Sam filed his administrative claim with the Internal Revenue Service on April 10, 2000. However, the complaint alleges that the administrative claim for refund was filed on March 24, 2000, Paper No. 1 at ¶ 5, and the United States admitted this fact in its answer. Paper No. 6 at ¶ 5. Therefore, the date before which claims will be precluded by limitations is March 24, 1998, not April 10, 1998.
Accordingly, the $900 payment made on April 2, 1998 will remain in the case.
The United States made an additional error in calculating the amounts that should be deducted from Mr. Sam's claim. After it reduced the claim to the amount sought administratively, the United States then subtracted all of the pre-limitations claims. However, some of the pre-limitations claims had already been subtracted because they were not included in the administrative claim. The United States is not entitled to subtract them twice.
After discounting claims not made administratively and those claims barred by limitations, Mr. Sam's potential recovery is $7369.26. This includes:
Taxes Paid for Period Ending Form Amount Allowed March 31, 1993 941 140.61 June 30, 1993 941 1611.92 September 30, 1993 941 1583.73 December 31, 1993 941 1556.04 December 31, 1992 940 977.95 December 31, 1993 940 1499.01 TOTAL 7369.26 See Defendant's exhibits E-J; see also Defendant's exhibits 5 and 10. 4. Conclusion.The United States' motion for partial summary judgment will be granted, to the extent indicated in this opinion, limiting Mr. Sam's potential recovery to $7369.26, plus statutory interest.