Opinion
CIVIL ACTION NO. 1:02-cv-0010-GET
July 21, 2003
ORDER
The above-styled matter is presently before the court on:
(1) defendant's motion to dismiss [docket no. 12-1];
(2) defendant's motion for summary judgment [docket no. 12-2];
(3) plaintiff's motion for summary judgment [docket no. 14].
On January 4, 2002, plaintiff filed this action against the United States to obtain a refund of federal employment taxes for 1993 through 1995 in the amount of $3,544,536.37, plus interest. Plaintiff amended its complaint on January 22, 2002. On October 10, 2002, defendant filed a motion to dismiss or, in the alternative, motion for summary judgment. Plaintiff filed a cross-motion for summary judgment on November 1, 2002.
Defendant's motion to dismiss
Facts
For the years 1993, 1994, and 1995, the Internal Revenue Service ("IRS") required plaintiff to file employment tax returns on a monthly basis. During the relevant time period, plaintiff also made federal employment tax deposits on a monthly basis.When employment tax returns are filed on a monthly basis, a revenue officer is required to consolidate the returns each quarter and ensure that the tax is assessed. The revenue officer assigned to collect plaintiff's liabilities, however, failed to do so.
On March 24, 1999, the IRS issued Letter No. 3164 (01-1999) related to the time periods at issue in this action. In response, plaintiff produced copies of the returns at issue.
In June 1999, the IRS assessed the taxes for the subject returns. The IRS later conceded that these assessments were made after the statute of limitations for assessments pursuant to 26 U.S.C. § 6501(a) had expired and abated the assessments.
On January 27, 2000, plaintiff's counsel wrote defendant requesting an abatement of the taxes which were assessed after the expiration of the limitations period. On May 30, 2000, plaintiff clarified that it was seeking a refund. The IRS, however, determined that there was no overpayment of tax for the relevant time periods and denied the plaintiff's request for a refund. Plaintiff then brought the instant action to obtain a refund.
Discussion
Defendant moves to dismiss plaintiff's action for lack of subject matter jurisdiction because plaintiff did not timely file a claim for refund with the IRS.
Under settled principles of sovereign immunity, `the united States, as sovereign, Is immune from suit, save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.' A statute of limitations requiring that a suit against the Government be brought within a certain time period is one of those terms.United States v. Dalm, 494 U.S. 596, 608, 110 S.Ct. 1361, 1368 (1990) (internal citations omitted).
Plaintiff contends that this court has jurisdiction of this action pursuant to 28 U.S.C. § 1340 and 1346(a)(1). Under § 1346(a) (1), a district court has jurisdiction over a "civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws." 28 U.S.C. § 1346(a)(1).
A prerequisite for maintaining such a suit in court is the timely filing of a claim for refund or credit with the IRS. 26 U.S.C. § 7422(a); Dalm, 494 U.S. at 601, 110 S.Ct. at 1364. The time for submitting such a claim for refund or credit is set forth in 26 U.S.C. § 6511(a), which provides:
Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.26 U.S.C. § 6511 (a).
The returns at issue in this case were deemed filed no later than April 15, 1996. See 26 U.S.C. § 6513(c)(1) (employment tax return filed by April 15 of succeeding year treated as having been filed on April 15). Likewise, the latest payment at issue in this case was deemed paid on April 15, 1996. See 26 U.S.C. § 6513 (c) (2). Plaintiff's claim for a refund was filed on January 27, 2000. Therefore, by the time plaintiff filed this claim, the statute of limitations set forth in 26 U.S.C. § 6511 (a) had expired on all the claims. Plaintiff argues, however, that the IRS failed to timely assess the taxes pursuant to 26 U.S.C. § 6501 (a), which provides that "any tax imposed . . . shall be assessed within 3 years after the return was filed." 26 U.S.C. § 6501. Plaintiff further cites to 26 U.S.C. § 6401(a) which states: "(a) Assessment and collection after limitation period. — The term 1 overpayment' includes that part of the amount of the payment of any internal revenue tax which is assessed or collected after the expiration of the period of limitation properly applicable thereto." 26 U.S.C. § 6401(a) (emphasis in original). Therefore, according to plaintiff, the right to the credit or refund for overpayment pursuant to 26 U.S.C. § 6401 (a) did not arise until the time for assessing the particular taxes at issue expired pursuant to 26 U.S.C. § 6501 (a). Thus, according to plaintiff, its claim is not barred by 26 U.S.C. § 6511 (a).
Having reviewed and considered the arguments of plaintiff, the court finds them to be unavailing. "A payment of properly owed taxes within the statutory period for assessment is not an overpayment even if there is no formal assessment." Ewing v. United States, 914 F.2d 499 (4th Cir. 1990). Furthermore, the United States Supreme Court has stated that "[t]he most sensible interpretation of § 6511(a) is that a tax is paid when the taxpayer tenders payment of the tax to the IRS, not when the taxpayer discovers that the payment was erroneous. The very purpose of statutes of limitations in the tax context is to bar the assertion of a refund claim after a certain period of time has passed, without regard to whether the claim would otherwise be meritorious. That a taxpayer does not learn until after the limitations period has run that a tax was paid in error, and that he or she has a ground upon which to claim a refund, does not operate to lift the statutory bar." Dalm, 494 U.S. at 610, 110 S.Ct. at 1369, n. 7. See Baral v. United States, 528 U.S. 431, 437-39, 120 S.Ct. 1006, 1011 (2000) (finding taxes governed by a "deemed paid" provision were paid at time of remittance of estimated tax and not only when tax is assessed); See also Dantzler v. United States Internal Revenue Service, 183 F.3d 1247, 1251-52 (11th Cir. 1999) (remittance given to IRS not under protest would be considered to have been paid when the remittance was made and not when the assessment takes place). Where a claim for refund has nut been filed or has been filed late, a court lacks subject matter jurisdiction over the refund suit. See Dalm, 494 U.S. at 608-09, 110 S.Ct. at 1363-69; Vintilla v. United States, 931 F.2d 1444, 1446 (11th Cir. 1991).
Therefore, in light of the foregoing, the court finds that the court lacks subject matter jurisdiction over this action inasmuch as plaintiff's claim was initiated after the applicable statute of limitations. Accordingly, defendant's motion to dismiss [docket no. 12-1] is GRANTED. Defendant's motion for summary judgment[docket no. 12-2] and plaintiff's motion for summary judgment[docket no. 14] are DISMISSED AS MOOT.
Summary
(1) defendant's motion to dismiss [docket no. 12-1] is GRANTED;
(2) defendant's motion for summary judgment [docket no. 12-2] is DISMISSED AS MOOT;
(3) plaintiff's motion for summary judgment [docket no. 14] is DISMISSED AS MOOT.