Dickow v. United States

• Decision Date: 19 August 2011
• Docket Number: No. 10–2151.,10–2151.
• Parties: D. Charles DICKOW, as Executor of the Estate of Margaret W. Dickow, Plaintiff, Appellant,v.UNITED STATES; Internal Revenue Service, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

654 F.3d 144

108 A.F.T.R.2d 2011-5874

2011-2 USTC P 60,626

D. Charles DICKOW, as Executor of the Estate of Margaret W. Dickow, Plaintiff, Appellant,

v.UNITED STATES; Internal Revenue Service, Defendants, Appellees.

No. 10–2151.

United States Court of Appeals, First Circuit.

Heard June 6, 2011.Decided Aug. 19, 2011.

Dennis J. Kelly, with whom Andrea L. Martin and Burns & Levinson LLP were on brief, for appellant.Rachel I. Wollitzer, Attorney, Tax Division, Department of Justice, with whom Gilbert S. Rothenberg, Acting Deputy Assistant Attorney General, Thomas J. Clark, Attorney, Tax Division, Department of Justice, and Carmen Milagros Ortiz, United States Attorney were on brief, for defendants.

Before LYNCH, Chief Judge, LIPEZ and THOMPSON, Circuit Judges.LYNCH, Chief Judge.

Plaintiff D. Charles Dickow, Executor of the Estate of Margaret W. Dickow, brought suit in 2009 seeking a refund of federal estate taxes in the sum of $237,813.48 that he says were erroneously paid.

Pursuant to 26 U.S.C. § 6511(a), a taxpayer seeking such a refund must file his refund claim within three years of filing the tax return or within two years from the time the tax was paid, whichever is later. Furthermore, for taxpayers who claim a refund within three years of filing the return, § 6511(b)(2)(A) substantively limits the amount of any such refund to the portion of the tax paid within the three years immediately preceding the refund claim, plus the period of any extension of time for filing the return.

Dickow paid the estate taxes on October 10, 2003, and filed the estate tax return on September 30, 2004, but did not file the refund request until September 10, 2007. The IRS denied the claim on the ground that the refund sought was outside the look-back period set forth in § 6511(b)(2)(A). In this suit Dickow asserts that the IRS position is wrong as a matter of law, and secondarily, that the IRS is equitably estopped by its conduct. Each of these arguments presents a question of first impression in the courts of appeals.

The precise question on appeal is whether it was error for the IRS to conclude that § 6511(b)(2)(A) and its implementing regulations bar the requested refund because Dickow was not entitled to a second extension of the filing deadline that determined the estate's eligibility for the refund.¹ The answer to this question turns on interpretation of 26 U.S.C. § 6081, governing extensions of time, and the regulations promulgated by the IRS within its authority under the Internal Revenue Code.

The equitable estoppel claim is not available under United States v. Brockamp, 519 U.S. 347, 117 S.Ct. 849, 136 L.Ed.2d 818 (1997), and is, in any event, meritless. We affirm the district court's dismissal for lack of jurisdiction. See Dickow v. United States, 740 F.Supp.2d 231 (D.Mass.2010).

I.

The underlying facts are undisputed. Margaret Dickow died on January 15, 2003. Pursuant to 26 U.S.C. § 6075(a), the federal tax return for her estate was due October 15, 2003, nine months after her death. On October 10, 2003, plaintiff Dickow, as executor of the estate, mailed to the IRS a completed IRS Form 4768 (Application for Extension of Time to File a Return and/or Pay U.S. Estate Taxes). Dickow enclosed a check for $945,000 in payment of the estimated estate tax due. The IRS received the extension application and check on October 14, 2003. Pursuant to Treasury Regulation § 20.6081–1(b), the estate's filing deadline was automatically extended by six months to April 15, 2004.

On March 23, 2004, Dickow submitted to the IRS what he characterizes as a second extension request: an alteration of a standardized Form 4768 in which he attempted to request an additional six-month extension of time in which to file the estate tax return. This time, Dickow modified the form by adding the typed words “REQUEST FOR SECOND EXTENSION” at the top of the first page. In the section entitled “Payment To Accompany Extension Request,” Dickow also added a new line with the typed words “Amount Previously Paid” and “$965,000.” ² Dickow did not check any of the boxes on the form that identified which of several recognized grounds qualified him for a filing extension.³ Dickow did attach to the form a statement that he was requesting “an additional six month period of time to file [the federal estate tax return] ... because, despite due diligence on his part, he has not received an appraisal of a real estate asset which constitutes a large portion of the Estate.” In the section of the form entitled “Extension of Time to Pay,” Dickow typed in “October 15, 2004” as his requested extension date.

The IRS received Dickow's second extension request on March 28, 2004. The IRS files include a copy of the request indicating that the IRS denied Dickow an extension of time to file but granted Dickow an extension of time to pay. Specifically, on the second page of the request, in the section that begins “The application for extension of time to file,” the option “Not approved because” is marked with an “X” and stamped with the words “Previous extension request granted to 04/15/04. By law, extension of time to file may be granted for no longer than six months. Please file your return without delay to avoid additional penalties and interest.” Also on the second page, in the section that begins with “The application for extension of time to pay,” the option “Approved” is marked with an “X” and annotated with the words “To: 10/15/04.” The IRS did not send the estate a notification that it was granting or denying the request for a second extension of time to file.

Dickow did not file the estate's federal tax return on April 15, 2004. The IRS Form 4340 Certificate of Assessments, Payments, and Other Specified Matters for the estate includes entries, dated August 16 and October 11, 2004, which document taxpayer delinquency notices that the estate's tax return was overdue, but Dickow asserts that he never received any such delinquency notice. We assume, taking all inferences in Dickow's favor, that he did not receive any delinquency notice nor did he receive a copy of the IRS stamped response to his request denying it and stating that “[b]y law, extension of time to file may be granted for no longer than six months.”

On September 30, 2004, Dickow mailed the estate's federal tax return to the IRS. The return claimed a refund of $337,139.81 based on the estate's overpayment of estimated estate taxes in October 2003. The IRS received the return on October 5 and refunded the requested amount on November 1.

On September 10, 2007, Dickow sent the IRS an amended estate tax return in which he claimed a refund of $574,953.29, consisting of the $337,139.81 that had previously been refunded and an additional $237,813.48. On October 15, 2007, the IRS denied Dickow's claim for the additional refund.⁴

On May 14, 2009, Dickow filed suit in the United States District Court for the District of Massachusetts against the IRS, alleging a claim to the additional $237,813.48 under the theory that he was entitled to the refund under 26 U.S.C. § 6511 (Count I) and, in any event, under a theory of equitable estoppel (Count II). Both parties moved for summary judgment.

The district court determined that Dickow's refund request did not comply with § 6511(b)(2)(A).⁵ Dickow, 740 F.Supp.2d at 237. To determine whether Dickow received filing extensions that rendered his refund request timely, the court analyzed 26 U.S.C. § 6081(a) and its implementing regulations. The court determined that § 6081(a) was ambiguous as to whether the IRS could grant more than one six-month extension. However, the court found that the implementing regulations, as codified in Treasury Regulation § 20.6081–1, were clear that the IRS lacked the authority to grant Dickow more than one six-month extension. Because Dickow's claim was filed more than three years plus six months after his payment, his refund request was untimely. Dickow, 740 F.Supp.2d at 236–37.

On the issue of equitable estoppel, the district court concluded that under Brockamp, a plaintiff may not extend the time for filing a tax refund claim on the basis of equitable estoppel. Dickow, 740 F.Supp.2d at 237–38. And even if the plaintiff were not so precluded, the court held, Dickow's claim was insufficient as a matter of law because Dickow did not show that the government engaged in “affirmative misconduct.” Id. at 239. The court dismissed the case for lack of jurisdiction.

II.

We review the district court's grant of summary judgment de novo. FleetBoston Fin. Corp. v. Alt, 638 F.3d 70, 76 (1st Cir.2011). In any event, the dispositive issues are ones of law, which we review de novo. United States v. Meléndez–Santiago, 644 F.3d 54, 59 (1st Cir.2011).

A. The Statutory/Regulatory Argument

Under 26 U.S.C. § 6511, there are limits on the time within which a taxpayer may claim a refund of overpaid taxes. In “look-back” situations, § 6511 also limits the amount of the claim for a refund or credit by reference to time period. As the Supreme Court noted in Commissioner v. Lundy, 516 U.S. 235, 116 S.Ct. 647, 133 L.Ed.2d 611 (1996), § 6511 “contains two separate provisions for determining the timeliness of a refund claim: ... a filing deadline ... [and] two “look-back” periods.” Id. at 239–40, 116 S.Ct. 647.

Subsection (a) of § 6511, entitled “Period of limitation on filing claim,” provides that any such refund request must 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). That provision is not at issue.

What is at issue ⁶ is subsection (b) of § 6511, which is entitled “Limitation on allowance of credits and refunds.” It includes subsection (b)(1), which addresses “Filing of claim[s] within [the] prescribed period,” and subsection (b)(2),...