Ameel v. United States

Decision Date03 June 1970
Docket NumberNo. 19983.,19983.
Citation426 F.2d 1270
PartiesFrancis H. AMEEL, Administrator d.b.n. Estate of Mary E. Ameel, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

J. Leon Katz, Detroit, Mich., for appellant.

Richard Farber, Dept. of Justice, Washington, D. C., (Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson, William A. Friedlander, Attys., Dept. of Justice, Washington, D. C., on the brief), for appellee. James H. Brickley, U. S. Atty., Detroit, Mich., of counsel.

Before CELEBREZZE and COMBS, Circuit Judges, and O'SULLIVAN, Senior Circuit Judge.

CELEBREZZE, Circuit Judge.

This is an appeal from a judgment of the United States District Court for the Eastern District of Michigan granting the Government's motion to dismiss for lack of jurisdiction over the subject matter. The Appellant seeks refund of federal estate taxes alleged to have been erroneously assessed and collected against the estate. Section 7422 of the Internal Revenue Code of 1954, 26 U.S.C. § 7422 (1964). The District Court granted Appellee's motion to dismiss the action on the grounds that the Appellant's claim for refund was not filed within the applicable statute of limitations, Sections 3511(a) and (b) of the Internal Revenue Code of 1954, 26 U.S.C. §§ 6511(a) and (b), and hence the Court was without jurisdiction over the subject matter. 26 U.S.C. § 7422 (1964), 28 U.S.C. § 1291 (1964).

The relevant facts in the case were stipulated and are as follows:

The decedent, Mary E. Ameel, died on May 19, 1959. Thereafter Mary A. Peltier was appointed executrix of her estate. As executrix, Mrs. Peltier filed a timely estate tax return on behalf of the estate and remitted the tax payable as reported thereon with the filing of the return. Thereafter, the estate tax return was the subject of an audit by an Internal Revenue agent. The agent determined that certain of the assets in the estate had been undervalued on the estate tax return as filed. The agent recomputed the amount of estate tax based on the value of the assets as determined by him. The agent computed additional taxes due in the amount of $5,339.80, and presented this computation to Mrs. Peltier. Mrs. Peltier agreed with the agent that the additional taxes were due, signed a Treasury Form 890, which had been prepared by the Internal Revenue agent and, after the amount of additional interest from the date the return was due to February 7, 1963, had been computed, presented the Internal Revenue agent with a check for the total amount of taxes and interest due. At the time that she remitted the check to the agent, Mrs. Peltier did not intend to contest the correctness of the agent's determination. On receipt of the check, the Internal Revenue agent prepared a Treasury Form 1962. On the Form 1962, the agent instructed that the amount paid be immediately assessed.1 Thereafter the check was processed and the additional taxes plus interest which had been owed by the estate of Mary Ameel were listed on the next assessment roll, which was signed February 21, 1963.

Sometime thereafter, Mary Peltier's brother, Francis H. Ameel, Appellant herein, formed the opinion that the assets had been correctly valued on the estate tax return as originally filed. Mr. Ameel was unable to persuade his sister to file a claim for refund so it was necessary for him to be appointed administrator of the estate before the claim for refund could be filed. On February 9, 1965, Mary Peltier was discharged as executrix of the estate and taxpayer was appointed administrator de bonis non. On that same date, taxpayer filed a claim for refund of the taxes remitted February 7, 1963.

These facts give rise to a single issue: whether the refund claim filed by Appellant on February 9, 1965 was timely under the applicable sections of the Internal Revenue Code of 1954. 26 U.S.C. §§ 6511(a) and (b), 7422 (1964), which provide:

Civil actions for refund of taxes paid shall not

"be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected * * until a claim for refund or credit has been duly filed."

A claim for refund must comport with the requirements of Section 6511(a) and (b) of the Internal Revenue Code of 1954 to be considered as "duly filed." Those sections, in part, state:

"(a) Period of Limitation on Filing Claim. — 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, * * *.
"(b) Limitation on Allowance of Credits and Refunds. (1) Filing of claim within prescribed period. — No credit or refund shall be allowed or made after the expiration of the period of limitation prescribed in subsection(a) for the filing of a claim for credit or refund, unless a claim for credit or refund is filed by the taxpayer within such period." 26 U.S.C. § 6511(a) and (b) (1964).

Applying these statutory commands to the stipulated facts, there is no question that the claim for refund (February 9, 1965) was filed more than three years after the return (August, 1960) was filed. The only issue which remains is whether the claim for refund was filed within "2 years from the time the tax was paid." The Government contends that the date of payment should be measured from February 7, 1963 (the date of remittance and of the filing of Form 1962), and that the aforequoted statutes bar any civil action for refund brought after February 7, 1965. Hence, the instant claim filed on February 9, 1965 would be untimely. On the other hand, the Appellant contends that the date of payment was February 21, 1963 (the date of formal assessment), making the refund claim of February 9, 1965 within "2 years from the time the tax was paid." 26 U.S.C. § 6511 (1964).

In general, a tax is considered "paid" for purposes of the running of the period of limitations when a taxpayer files his return, accompanied by his payment. This is in accord with the United States Supreme Court's instructions that the words "payment of such tax" in the context of the predecessor section to the instant statutory framework should be given the meaning "these words ordinarily convey." Rosenman v. United States, 323 U.S. 658, 661, 65 S.Ct. 536, 89 L.Ed. 535 (1945). On the other hand, where there is no tax liability computed and proposed, a remittance is to be treated as a cash bond to stop the running of interest on the amount "dumped," Busser v. United States, 130 F.2d 537 (3d Cir. 1942), or deposited until a more definite determination of tax liability is asserted by the Government. Rosenman v. United States, 323 U.S. 658, 65 S.Ct. 536, 89 L. Ed. 535 (1945). In such cases, "payment" occurs when the indefinite tax liability is further defined; such as by a formal assessment of a definite amount.

The instant case presents a factual pattern which falls between the standard patterns of the good faith filing of a return to pay a computed liability and the depositing of funds to stop the running of interest on an undefined tax liability. This action is unlike the case of the taxpayer filing his return because the deficiency is computed and proposed by a government agent rather than by the taxpayer himself, hence increasing the likelihood the taxpayer will contest the proposed deficiency. Also, it is unlike the Rosenman case in which funds were deposited solely to stop the running of interest. In that case the parties stipulated, in effect, that a defined tax liability would not take place until assessment.2

The Appellant contends that a remittance in response to a proposed deficiency is a cash bond which may not constitute payment until the tax is defined by assessment. Thomas v. Mercantile National Bank, 204 F.2d 943 (5th Cir. 1953); United States v. Dubuque Packing Co., 233 F.2d 453 (8th Cir. 1956). However, a number of courts construed certain dicta3 in Rosenman v. United States, 323 U.S. 658, 65 S.Ct. 536, 89 L.Ed. 535 (1945), to suggest that payment may be effected prior to a formal assessment where the Government asserts and the taxpayer discharges, without contest, what he deems to be a liability. Fortugno v. Commissioner of Internal Revenue, 353 F.2d 429, 435 (3d Cir. 1965); Lewyt Corp. v. Commissioner of Internal Revenue, 215 F.2d 518 (2d Cir. 1954), aff'd in part and rev'd in part, 349 U.S. 237, 75 S.Ct. 736, 99 L.Ed. 1029 (1955); Charles Leich & Co. v. United States, 329 F.2d 649, 165 Ct.Cl. 127 (1964).

A review of these cases indicates that a number of factors determine what constitutes "payment." As Mertens, Law of Federal Income Taxation states:

"This much is clear: (1) a remittance is not per se `payment\' of the tax; (2) a remittance that does not satisfy an asserted tax liability should not be treated as the `payment\' of a tax; and (3) an essential factor in `payment\' before assessment is the satisfaction or discharge of what the taxpayer deems a liability." Mertens, supra, Vol. 10, § 58.27 at 79 (1964 ed.)

These factors coalesce in the instant case. The Appellant made a remittance; it was in response to a proposed deficiency asserted by the Government; and it was made with the Appellant intending to satisfy a proposed deficiency and discharge any further tax liability. We find, therefore, that the voluntary remittance by Appellant effected on February 7, 1963...

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