Deleet Merchandising Corp. v. United States, Civ. A. No. 80-0026.

Decision Date22 December 1981
Docket NumberCiv. A. No. 80-0026.
Citation535 F. Supp. 402
PartiesDELEET MERCHANDISING CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant.
CourtU.S. District Court — District of New Jersey

Fredericks & Messinger by Barry I. Fredericks, Hackensack, N. J., Goldschmidt, Fredericks & Oshatz by Edward Sussman, New York City, for plaintiff.

Stephen T. Lyons, Trial Atty., Tax Div., Dept. of Justice, Washington, D. C., for defendant.

CLARKSON S. FISHER, Chief Judge.

This is a motion for summary judgment brought by plaintiff, Deleet Merchandising Corporation, against defendant, the United States of America. For reasons stated herein, the motion is granted.

Plaintiff timely filed its 1967 and 1968 corporate income tax returns with the Internal Revenue Service and paid the tax shown to be due thereon. In August 1973, plaintiff filed amended income tax returns for 1967 and 1968 in which it requested a refund for 1967 and paid an additional tax due for 1968. In December 1979, the I.R.S. issued a statutory notice of deficiency to plaintiff stating that the claim for a refund for 1967 was disallowed and that there was a further tax deficiency for both years. Plaintiff then paid the asserted deficiencies and penalties and, in May 1980, filed a claim for a refund for those amounts on the ground that its amended returns were correct as filed.

Plaintiff also filed this action for a refund of the asserted deficiencies on the grounds that the I.R.S.' determination was improper, illegal and erroneous. Plaintiff now brings this motion for summary judgment pursuant to Fed.R.Civ.P. 56 alleging that the defendant is time-barred under 26 U.S.C. § 6501 which requires any tax to be assessed by the I.R.S. within three years after a return is filed. Defendant opposes the motion on the ground that this court lacks jurisdiction to hear the § 6501 statute-of-limitations issue.

Plaintiff alleged jurisdiction in its complaint under 28 U.S.C. § 1346(a)(1) which grants the district courts original jurisdiction of any civil action against the United States for the recovery of any tax or penalty alleged to have been erroneously or illegally assessed or collected. However, that statute is supplemented by 26 U.S.C. § 7422(a) which requires a taxpayer to file an administrative claim for a refund with the I.R.S. before a suit can be maintained in a district court. Treasury regulation 26 C.F.R. § 301.6402-2(b) further requires a claim for a refund to set forth in detail each ground upon which the refund is claimed. Thus, "a prerequisite of jurisdiction of the district court conferred by 28 U.S.C. § 1346(a)(1) is the filing of a claim for refund so that the Internal Revenue Service may first pass upon the validity of it. 26 U.S.C. § 7422(a)." Miniature Vehicle Leasing Corp. v. United States, 266 F.Supp. 697, 702 (D.N.J.1967). In addition, "the law is well settled that a plaintiff in a tax refund suit may only recover upon the grounds specifically set forth in the administrative refund claim." Spaeder v. United States, 478 F.Supp. 73, 80 (W.D.Pa.1978).

Plaintiff in this case complied with the section 7422(a) requirement by filing an administrative claim for a refund; however, that claim merely alleged that plaintiff's amended tax returns for the years in question were correct as filed. Thus, the defendant bases its jurisdictional argument on the ground that plaintiff did not set forth the section 6501 statute-of-limitations issue in the claim for a refund. However, plaintiff has cured the jurisdictional defect by recently filing an amended claim for a refund with the I.R.S., which includes the section 6501 issue. This amended claim was timely filed. 26 U.S.C. § 6511(a). Thus, defendant's jurisdictional argument is moot.

Plaintiff now seeks a summary judgment alleging that there are no genuine issues of material fact and that defendant is precluded from assessing the tax deficiency in question because the assessment was untimely. It is provided in 26 U.S.C. § 6501(a) that

except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed)....

However, 26 U.S.C. § 6501(c)(1) states that

in the case of a false or fraudulent return with the intent to evade tax, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.

Plaintiff now argues that its non-fraudulent amended returns, filed in 1973, triggered the 3-year statute-of-limitations period in section 6501(a). Defendant argues that plaintiff's original returns were fraudulent, thus allowing the I.R.S. to assess a tax "at any time" und...

To continue reading

Request your trial
4 cases
  • Badaracco v. Commissioner of Internal Revenue Deleet Merchandising Corp v. United States
    • United States
    • United States Supreme Court
    • 17 Enero 1984
    ...filed, regardless of whether the original returns were fraudulent. The District Court agreed and granted summary judgment for Deleet. 535 F.Supp. 402 (1981). It relied on the Tax Court's decision in Klemp v. Commissioner, supra, and on Dowell v. Commissioner, 614 F.2d 1263 (CA10 1980), cert......
  • Riland v. Comm'r of Internal Revenue , Docket No. 6854-79.
    • United States
    • United States Tax Court
    • 2 Agosto 1982
    ...Cir., Apr. 26, 1982); Badaracco v. Commissioner, T.C. Memo. 1981-404, on appeal (3d Cir., Nov. 6, 1981); Deleet Merchandising Corp. v. United States, 535 F. Supp. 402 (D. N.J. 1981); Britton v. United States, 532 F. Supp. 275 (D. Vt. 1981). See also Espinoza v. Commissioner, 78 T.C. 412 (19......
  • Badaracco v. C.I.R., 81-3033
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • 29 Noviembre 1982
    ...and penalties could not be assessed more than three years after the filing of a non-fraudulent amended return. The district court, 535 F.Supp. 402, granted the motion and the Commissioner appealed. II. To support their claims that the three year statute of limitations has run, the taxpayers......
  • Galvin v. Commissioner, Docket No. 11697-81.
    • United States
    • United States Tax Court
    • 29 Noviembre 1982
    ...provided for in section 6501(a) started running. Accord: Deleet Merchandising Corp. v. United States 82-1 USTC ¶ 9184, 535 F. Supp. 402 (D.N.J. 1981); Britton v. United States 81-2 USTC ¶ 9739, 532 F. Supp. 275 (D. Vt. 1981), affd. in an unreported opinion (2d Cir., Apr. 15, 1982). Despite ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT